A consolidation loan is a type of loan that combines multiple debts into a single loan with one monthly payment, often at a lower interest rate. This can simplify your financial management by reducing the number of payments you need to make and potentially lowering your overall interest costs.
Combining Debts: A consolidation loan pays off multiple existing debts (like credit cards, medical bills, or other loans), leaving you with just one loan to manage.
Single Monthly Payment: Instead of juggling multiple payments, you make a single monthly payment to the new lender.
Interest Rates: The consolidation loan often comes with a lower interest rate compared to the average rate of your existing debts, which can save you money over time.
Loan Term: The term of the consolidation loan may be longer, resulting in lower monthly payments, but you may pay more in interest over the life of the loan.
