Meerkat vs Debt Consolidation Loans: What’s the Better Option for You?

When you’re feeling overwhelmed by debt, it’s natural to look for solutions that will give you breathing room and a clear path forward. In South Africa, two of the most common options are Debt Review (also known as Debt Counselling) and Debt Consolidation Loans. While they both aim to simplify your financial life, they work very differently and come with their own advantages and risks.

Let’s unpack the differences, so you can make the best decision for your situation.

What is Debt Review?

Debt Review is a legal process regulated by the National Credit Regulator (NCR). Meerkat is an NCR-registered debt counsellor and service provider.

Here’s how it works:

• A debt counsellor assesses your income, expenses, and debts.
• They negotiate with your creditors to reduce interest rates and/or extend repayment terms.
• All your debt repayments are combined into one affordable monthly payment via a Payment Distribution Agency (PDA).
• Once you’ve repaid your debts under the plan, you’re issued a clearance certificate, confirming that you’re debt-free.

Debt Review is designed for people who are over-indebted and need both affordability and legal protection from creditors.

👉 Learn more: What is Debt Review?

What is a Debt Consolidation Loan?

A debt consolidation loan is when you borrow one new loan, usually from a bank or lender and use it to pay off several smaller debts, such as credit cards or store accounts. Instead of juggling multiple repayments, you’re left with one loan to repay.

The idea is to simplify things and potentially lower your monthly repayment if you can secure a better interest rate or stretch the repayment term. But it’s important to remember:

• You still owe the full principal plus interest of the new loan.
• If the loan comes with high interest or a very long term, you may end up paying more over time. 
  

Key Differences Between Debt Review and Consolidation Loans

• Choose Debt Review if:
  • You’re already over-indebted (more than half your income going to debts, missed payments, creditor pressure).
  • You want legal protection and a structured, regulated process.
  • You need a payment that’s matched to what you can realistically afford.
• Choose a Debt Consolidation Loan if:
  • Your debts are manageable, and you still have a good credit record.
  • You qualify for a lower interest rate than your current debts.
  • You’re disciplined and won’t fall back into using other credit facilities after consolidation.

Possible Downsides to Consider

Debt Review downsides:

• Your credit record reflects you’re under review until completion.
• It can take several years, depending on the size of your debt.
• There are regulated fees.

Debt Consolidation downsides:

• Longer terms may mean much higher total interest.
• If you don’t close old credit accounts, you may end up with more debt.
• Not everyone qualifies; interest may be high if your risk is high.

📂Find out More
 

So, What’s “Better”?

There’s no single “best” option; it depends on your situation. Ask yourself:

1. How much debt do I have, and how many accounts?
2. What interest rates am I currently paying?
3. Is more than half of my income already going to debts?
4. Do I qualify for a loan at a favourable rate?
5. Do I need immediate legal protection from creditors?
6. Can I commit to avoiding new debt?

In Summary

• If you’re over-indebted, struggling to cope, and worried about creditor pressure, then Debt Review through Meerkat is usually the safer, more sustainable route.
• If your debts are manageable, you have good credit, and you can secure a consolidation loan at a favourable rate, then consolidation could simplify your life and even help you pay off faster.

At Meerkat, we’re here to help South Africans do more with their money, not just get out of debt, but build lasting financial wellness.