Lenders will request your credit records when you make an application for a loan. If you’ve got a less than perfect credit profile, our credit score and credit report guide has a number of tips on how to boost your attractiveness to lenders.

Lenders available today advertise the possibility of consolidating up to $70,000 using an unsecured debt consolidation loan. It’s likely you’ll need a lot less than that to sort your debt out, so shop around to be sure you’ve got the best interest rate and lowest fees. Balance transfer credit cards generally limit transfers to $10,000. 
 
Borrowing Times

• Most unsecured debt consolidation loans are usually between 1 and 5 years.
• The larger the amount you want to borrow, the longer the term usually.
• Balance transfer credit cards usually offer a 0% interest rate for 6 to 12 months - after that, it's normal for a discounted interest rate for the life of the balance owing. This effectively gives no repayment time limit.​

High debt levels mean a debt consolidation loan is unlikely to be approved for the entire balance. The best thing to do is pick out the highest-interest debt and see if you can put this into a balance transfer credit card or low-interest debt consolidation loan. The deal you get will depend on your income and credit history.  

If your total debt exceeds 50% of your income and you are not able to get either a loan or a balance transfer credit card, then you can look at making a financial hardship application - see our debt help guide for more details. Such a level of debt is unlikely to be repaid within five years, and debt relief is a sensible option. You can contact the Citizens Advice Bureau who has experience in negotiating with your lenders.  

The best thing to do is prepare a budget and ask for the debt(s) to be restructured in a way that brings your debt down, either on your own or with the help of an expert. Many New Zealanders with high debt levels accept that they are struggling to keep afloat and continue to make repayments, unaware that the debt will stay around for years. You don't have to face this stress and financial hardship - help is available. 

You decide what debts to include (i.e. consolidate) and which ones to leave as they are. For example, if you have a debt that has a lower interest rate than the current debt consolidation loan rates, it will be smart to keep it as it is. Your debt consolidation lender will make sure that you can afford to repay any existing loan alongside your new loan, so you won't find yourself stretched.​

Expensive credit card debt is best suited to balance transfer credit cards rather than a debt consolidation loan. If you are approved for a balance transfer credit card, you can pay as little as 0% interest for up to 12 months. Most deals allow you to consolidate the balances of as many cards as you have up to the approved limit of your new card.

Once approved, you’ll pay 0% interest on the total balance transferred. As an example, if your balance transfer totals $10,000 you could save up to $2,000 per year if the alternative were a debt consolidation loan with a 20% p.a. interest rate.

​ As with any balance transfer, it’s essential not to run up new balances on the existing cards – cancelling them once the transfer is done is the best idea.

If your debt consolidation loan application is approved, you will receive the money in your bank account. You then need to make manual payments to pay off the existing debts. We recommend settling debts as soon as you have your loan money sitting in your bank account – this will further reduce interest costs and lower the cost of your borrowing overall. 

If you apply for a balance transfer credit card, then the card issuer will repay the existing debts you've transferred directly so you won't be involved. 

This is essential to stop the cycle of high-interest personal debt repeating itself. To give yourself the best chance, the following steps can get you on the right track:

1. Cancel ALL credit and store cards you've transferred debt from. This is essential.
2. Do a personal budget. 
3. Set yourself a weekly discretionary spend limit for entertainment, and stick to it.
4. Learn to say "no" instead of saying "yes" on non-essential items you know you can't pay for right now. 
5. Look to shop more with cash and not card (even EFTPOS). It's much easier to see where the money goes with cash; plastic purchases are harder to keep track of.​

If you have a manageable amount of debt that you're on track to repay in 3 to 12 months,  save yourself the hassle and stick with it. Further loan applications will affect your credit history. If you can overpay debt every month, your balance and interest costs will fall away. 

Budget advisory services exist all over New Zealand, providing free-of-charge assistance to anyone needing help keeping their finances in order. Their services include helping you prepare a weekly budget, isolating spending habits you can eliminate all while providing a level of moral support. An appointment takes less than an hour and many have vast expertise in personal debt issues. Our guide to debt help has more details.

Facebook groups for debt support provider moral support during the repayment process. Servicing debt is never fun, but being open about it with your family will lower the risk of adding new debt. Keeping track of how much you have to repay is a good way to stay motivated.