Consolidating debt

What is debt consolidation?

Debt consolidation means combining all your existing debts/loans such as personal loans, car loans, credit cards, overdrafts and Buy Now, Pay Later (BNPL) debts into one single new loan. Instead of managing several repayments, you make one monthly payment – ideally at a lower interest rate.

This requires taking out one personal loan to pay off all other debts. A debt consolidation loan may also be known as a refinance loan. This page explains how debt consolidation works, what to consider before choosing this option and where to get support if you’re in financial difficulty.

Approval

Approval is not guaranteed. Lenders look at things like: 

• How much you earn, and whether you can afford the repayments
• Your credit record/history and any other debts you already have
• What the loan is for
• Their own lending rules and policies

Even if you meet the basic criteria, a lender may still decline an application if they consider the risk to be too high. Use CCPC's Loan comparison tool to check the total cost before deciding.

What are the advantages and disadvantages of using a debt consolidation loan? 

A debt consolidation loan can make money easier to manage by rolling several debts into one payment. This can sometimes lower your monthly repayments and reduce costs. 

However, there may be fees, and you might not qualify for a lower interest rate. If you spread the loan over a longer time, you could end up paying more interest overall. Also, if you keep borrowing after consolidating, you could build up new debts on top of the loans.

Struggling with multiple loans? 

If you are struggling to manage multiple loans or credit card debt, you are not alone. Many households in Ireland find it difficult to keep up with several repayments, which can become overwhelming over time. 

Free, independent support is available from the Money Advice and Budgeting Service (MABS). MABS can help you understand your options for dealing with debt, including alternatives to a debt consolidation loan. Support is available by phone, online or in person. 

Who might provide you with a debt consolidation or refinance loan?  

Debt consolidation loans may be available from your local credit union or bank, and could offer a practical, affordable solution. Here are the options worth considering:

Credit union loans 

Key points to consider with credit union consolidation loans:

• A single repayment: A number of existing debts may be combined into one monthly repayment. 
• Interest rates: Rates vary between credit unions and depend on borrower circumstances. They typically range from 7.75% to 12.74% APR.
• Fees and charges: Some credit unions do not charge arrangement fees or penalties for early repayment. Certain credit unions also provide loan protection insurance as part of the loan. 
• Support for borrowers: Credit unions may engage with members who experience financial difficulty to discuss repayment options, subject to their policies

Bank (including/digital banks/neobanks/fintech) or An Post loans:  

In Ireland, banks, fintech providers and An Post also offer debt consolidation loans, which may suit borrowers looking for larger loan amounts or online services.

• Fixed interest rates: Rates range from 6.5% to 7.1%* APR for consolidation loans   
• Online applications: Many offer quick online application processes, with approvals in minutes and next-day fund transfers 
• Loan limits: Some lenders may offer higher loan amounts, for example up to €75,000, with repayment terms of up to 10 years
• Set-up fees: Most lenders don’t charge application fees

* Interest rates quoted are subject to change.

As with any borrowing decision, consumers should compare offers, consider the total cost of credit and assess their ability to repay before taking out a loan. Under the Central Bank's Consumer Protection Code your lender must provide you with a personalised saving estimate (in euro) alongside each alternative mortgage refinancing option.