Debt Consolidation vs Debt Review

Debt Consolidation vs Debt Review
Become debt free by choosing one of these options

 A debt consolidation loan is a low-interest loan that can be used to clear off all your current outstanding debt.

Once you have paid off all your current unsecured debts, you can then enjoy repaying only one easy-to-manage loan instead of individually repaying all your debts each with their own high-interest monthly repayments.

How can you apply for a Debt consolidation loan?

Debt consolidation loans are available through banks and Debt Solution companies. You will be able to borrow a maximum of up to R300 000 to help you reduce your debt.

You can easily apply by approaching a bank or a reputable debt solution company. They will then check your debt by contacting the credit providers that you owe money to, along with your bank statements to see if it is necessary to consolidate your debt.

What is Debt Review?

Debt review is a legal process that was brought about in 2007 by the NCA (National Credit Association) for people who have become over-indebted and needed help with settling their outstanding debt.

Being over-indebted means that your expenses are more than your income. This results in you missing monthly credit payments and usually means that your accounts will be handed over to debt collectors to get the money out of you through harassing phone calls and emails.

Often over-indebted South Africans that do not opt for help from a debt review company in time become blacklisted and end up with a credit score that is completely ruined.  

How do you apply for Debt Review?

To enter a plan where your debt is reviewed, you will need to approach a company that is registered as a debt solutions company with the NCR. This company will then contact your debt providers and negotiate repayments and finally restructure your debt into an affordable monthly repayment.

The debt solutions company will take your monthly payment and redistribute it amongst the credit providers that you owe.

While debt consolidation loans and debt review share a few common similarities, they do also differ in many ways, as discussed below.

Debt consolidation loans

  • To qualify, you need to be able to afford a monthly loan repayment, and this is why you’ll need surplus income in your budget as well as a good credit score, to qualify for a loan of up to R300 000.
  • Limited to R300 000 for unsecured debts.
  • No court order is required and your loan can be handled through a bank or a credit solution
  • This loan will not prevent you from applying for additional debt.
  • One loan used for consolidating your debt looks better than having multiple credit accounts because it is all in one spot and the utilisation ratio helps you in this regard and builds your credit score.

Debt review

  • A good credit score is not required as clients are usually over-indebted and unable to qualify for any kind of loan.
  • No limit on the amount, since all your debt will be included in the plan.
  • It is a legal process that requires going through court.
  • You won’t be allowed to apply for more debt during your debt review process.
  • Debt review can remain in your name for much longer than a consolidation loan.
  • These are a few more costs that will be required whereas a loan for debt has just an initiation fee along with the interest rate.

The first couple months of debt review are just paying back fees that are required to get you into debt review, these include; application fees, administrative fees, restructuring fees, legal fees, and lastly 5% of your monthly debt repayments will serve as a debt counsellors fee. Debt consolidation loans just require an initiation fee – which is normal across all loans, and thereafter the interest rate that you secure when applying for the loan.

When applying for either debt consolidation or a debt review program, make sure to read the fine print or the T’s & C’s to ensure that you make an informed decision. For example, often with a loan for your debt, your interest rate may change to being more after the first 12 months.


Even though debt review and debt consolidation loans are very different, here are some similarities for you to take a look at:

  • Both of these solutions require you to have a steady monthly income.

To make your monthly repayments, you need to be earning a steady income. Both of these options require commitment in the form of a set monthly instalment over the stipulated period to complete paying off your debt, otherwise, you will face losing your assets as collateral for your missed payments.

  • Debt consolidation loans and debt review plans are both a means to an end concerning your trouble with credit.

Both serve as a way of ridding your debt and both can be successful in doing that, if you stick to the agreed terms, in the long term.

  • You are required to approach the different institutions to apply for these different programs.

You will need to seek this kind of help; the institutions will not approach you to help you. It requires you to step forward and sort out a plan that works best for you.

Both options will also assess whether you are actually in need of the help or not and whether you need this sort of facility or not.

  • You can rest assured that your assets will remain safe, as long as you are sticking to the payments.

As long as you are holding up your side of the contract with payments and making sure they are on time, your assets will remain yours.

  • Both of these options will take a while to pay off, they are by no means a quick fix.

Paying off your debt with the help of one of these solutions will always take longer than if you had not entered into a debt option and instead continued making the original monthly credit repayments to the credit providers that you owe money to.

Which is better?

While these two options share similarities, they remain very different in that one is for people who are blacklisted (Debt review) and/or have a poor credit score and the other is for people who can qualify for a legitimate loan (Debt consolidation loan).

So, it would matter solely on whether you can afford a loan and if you still qualify for one, or else the other option is debt review if your credit score is too poor to get a loan.

Ideally, for the sake of your financial future and your credit score, the better option would be to remain as far away from the blacklisted status as possible.

Popular & reliable direct lenders offering Consolidation loans

  1. FNB Consolidation loan


    • Loans up to R150,000
    • Term up to 60 months
    • Interest from 10.5%
  2. National Debt Advisors Consolidation loan

    National Debt A...

    • Manage your debt
    • Effective services
    • Live debt free
  3. Nedbank Consolidation loan


    • Loans up to R300,000
    • Term up to 72 months
    • Interest from 18.75%
  4. Debt Busters Consolidation loan

    Debt Busters

    • Asset protection
    • Lower fees
    • Affordable repayment