Debt consolidation combines multiple debts into one loan. It can simplify payments and reduce interest rates, but it's not right for everyone.
What is Debt Consolidation?
Debt consolidation means taking out a new loan to pay off existing debts. This leaves you with one payment instead of many, potentially at a lower interest rate.
Pros:
- • Single monthly payment
- • Potentially lower interest rate
- • Fixed repayment timeline
- • Improved credit score over time
Cons:
- • May extend repayment period
- • Origination fees
- • Risk of accumulating new debt
- • May require collateral