A debt consolidation loan is a type of debt refinancing which involves taking out a single loan to repay several others. This very commonly refers to an individual finance procedure of people dealing with high consumer debt. It is often used by businesses and corporations to reduce and sometimes eliminate their total debt obligations. Many companies and even individuals use debt consolidation to reduce total debt and improve their overall financial position.
Debt consolidation loans are typically unsecured, meaning that there is no collateral securing the loan. The potential benefits of a debt consolidation loan could extend to you if you can obtain one. You could refinance multiple debts together to reduce your overall monthly payment. By combining the numerous monthly payments into one single, more convenient payment, you may find that your overall financial obligation is reduced. A debt consolidation loan could also make the initial interest rate lower.