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How Does Debt Consolidation Work

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Debt consolidation is the process by which one loan is used to settle a number of other debts. There are usually two benefits: consolidation can improve your cashflow and also make it easier to manage your money.

Grouping a series of short-term debts - such as store or credit cards - into a single longer-term loan means your monthly payment will be reduced, freeing up cash. You may also benefit from a lower interest rate and as each lender may apply its own monthly charge or annual card fee. Having one loan with one company and one admin fee, can limit these additional costs.

Working with a single service provider makes administering your debt easier as there are fewer bills each month and, as a result, fewer payments.

So can debt consolidation work for you? The best starting point is to identify all of your current debt repayments and loans. Make a list of the companies to which you owe money and contact them to ask what interest rates they're charging. Also ask if they’re calculating interest daily or monthly – it will affect the total repayment.  Find out whether they are charging you an admin fee and how much it is. Finally check your bank statement to find out how much the bank is charging for each debit order.

The next step is to work out how much you still owe each company. To make your life easier, we have a handy account consolidator you can use.

Once you have all this information you'll be able to calculate the total value of the interest payments you're making each month and all the administrative costs.

Based on this you can determine whether a consolidation loan will free up some money each month.

You can apply for the loan online and will receive an instant answer as to whether it’s been approved. The interest rate will be fixed for the duration of the loan.

Once you’ve accepted the loan, the money is paid directly into your bank account, allowing you to settle all your other accounts. Doing this should enable you to reduce your monthly expenses and make it easier to control your finances.


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Consolidating can be an effective way to manage your finances and increase your cash flow.

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DirectAxis is a business unit of FirstRand Bank Limited, an Authorised Financial Services and Registered Credit Provider, NCRCP20. Direct Axis SA (Pty) Ltd, Reg no. 1995/006077/07, an authorised Financial Services Provider, FSP7249 & FSP5. 108 De Waal Road, Diep River 7800.

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Loan repayment terms range from 24 to 72 months. The maximum interest rate with regards to a DirectAxis Personal Loan is 24.50% per annum (compounded monthly). Your rate and initiation fee will be determined according to your personal risk profile.

An illustrative example of a loan at an interest rate of 24.50% per annum would be: Loan amount R50 000 plus a once-off initiation fee of R1 207.50 and a monthly admin fee of R69.00, over 72 months.

The total cost of the loan will be R 103 155.57 which is a maximum Annual Percentage Rate (APR) of 27.76%.