A consolidation loan is one new loan used to settle several smaller debts, leaving you with a single instalment and a single date. It helps when the new rate and term cost less overall than what you are paying now, and hurts when a longer term quietly increases the total.
You borrow an amount large enough to settle your existing balances, pay those accounts off, and then repay the single new loan. Nothing is written off. The debt is the same money, restructured into one agreement with one instalment, one rate and one end date.
The practical benefit is control. Multiple debit orders on different dates are how people miss payments, and a missed payment is what damages a credit record.
Consolidation is worth it when the total cost of the new loan is lower than the combined total cost of what it replaces. That usually happens when you are replacing expensive short-term credit — store cards, revolving accounts, several small loans — with one agreement at a lower effective rate over a similar term.
Stretching the same debt over a much longer term lowers the monthly instalment but raises the total interest paid. Compare total cost of credit, not just the instalment. And if the settled accounts stay open and get used again, you end up carrying both the consolidation loan and fresh balances.
Debt review is a formal National Credit Act process run by a registered debt counsellor, who renegotiates your obligations and places a flag on your credit record. Consolidation is an ordinary credit agreement with no flag. If you are already under debt review, you cannot take out a consolidation loan until the review ends.
Before you apply, write down for every debt you want to settle:
It is a single loan used to settle several existing debts, so you repay one instalment on one date instead of several. The debt is restructured, not reduced — you still repay the full amount, plus the interest and fees on the new agreement.
Settling accounts through a consolidation loan is normal credit activity and carries no debt review flag. The new loan appears on your record, and paying it on time helps your history. Missing payments on it damages your record as any other loan would.
No. Debt review is a formal National Credit Act process run by a registered debt counsellor and is flagged on your credit record. Consolidation is an ordinary credit agreement. You cannot take new credit while under debt review.
Applications referred through MCB Manco to FinChoice run from R500 to R25 000 over one to twelve months, which suits smaller balances such as store cards and short-term loans. Larger balances need a lender that offers higher amounts.
Not automatically. A lower monthly instalment over a longer term can cost more in total interest. Compare the total cost of credit on the new agreement against the combined totals of the debts it replaces before you commit.
