Debt consolidation is a form of debt refinancing. It requires taking out one large loan to pay off multiple smaller debts. A consolidation loan is usually provided through a bank or financial institution, and combines all of (or most of), your debts into one larger loan, with one monthly payment.
Advantages of Debt Consolidation:
- Opportunity for a lower interest rate means more money going towards interest
- Monthly payment could be more easily managed than multiple smaller payments
Disadvantages of Debt Consolidation:
- Not all consolidation loans mean lower interest rates, reading the fine print and understanding the total cost of interest is important
- You may end up owing more. Consolidating your debt frees up space on your credit cards which, if used, will result in you owning more money
- Depending on your current debt load and credit score, you may not qualify for a consolidation loan
Are you ready to be debt free?
Debt Relief Canada helps individuals across Canada to reduce and eliminate debt.
Contact us for a free, no obligation consultation.
Toll Free: 1.855.305.9940