Debt consolidation is when you get a loan to pay off multiple debts, usually with lower interest rates and fees. You can consolidate many forms of debt, including credit card, personal, and student loans.
For example, you might have four different forms of loans, each with different loan amounts. These debts are likely to have different interest rates and repayment dates. This makes keeping up with the loans complicated and difficult.
A debt consolidation loan combines all these debts into a manageable repayment package on your terms. This means that you can decide on the repayment frequency and loan terms to benefit you. Whether you would like to repay the loan quickly and pay more each month, or slowly and pay less each month, the power is in your hands.
Best of all, if the interest rate on the consolidation loan is lower overall than your current rates, you could save money and get ahead in reducing your total debt.
We’ve put together a visual guide here to help you better understand how debt consolidation works.