Consolidate Your Debt with Low-Cost Loans Consolidation of a debt refers to the act of combining multiple liabilities and loans into one. Borrowers who consolidate their debts seek to attain a lower rate of interest. People and companies with credit problems such as multiple student and car loans, and maxed out credit cards resort to debt consolidation for a greater ease of repayment. Before applying for such a loan, you may want to add up all of your existing debts. These include your personal loans and high-interest credit cards. The next step is to check the interest rates you are currently paying on all your accounts. Credit cards usually charge between 12 percent and 21 percent while the interest rates on personal loans tend to be lower. Once you have done this, you may want to contact several financial institutions and compare their programs and products. Check the internet, ask a real estate agent for advice, or look in the yellow pages. Determine which financial establishment offers the right product for you. Loans vary when it comes to interest rates, type of interest rate (adjustable or fixed), amount, and length. Ask different lenders in Canada about the amount of money you will pay in total and how long will it take to repay it. Inquire about the interest rate and whether it will change in the future. Ask what your monthly payments will be and whether you will be charged a penalty if you miss a payment. Are there any costs and penalties for repaying the debt consolidation loan early? If you use your home as collateral, what will happen if you are unable to keep up the payments? These are important questions to ask before you sign the agreement. Generally, the program and interest rate you qualify for depends on your home equity, income level, and credit history. Fill in the application form and submit it along with all requested documents. Supply copies of your credit card statements as well. This is how to apply for a debt consolidation, and it will take between 3 and 4 weeks to complete the process. The most important bills are not always the big ones. Priority debts are those for which lenders can take serious action against you if you are unable to repay them. Such include utility bills, rent, tax overpayments, and others. Electricity and gas companies, for example, can disconnect their services if you are unable to pay your bills. If the phone or mobile phone helps you earn a living, your phone bill is also a priority. Credit or non-priority debts are money borrowed from family and friends, and store card and credit card arrears. If you don’t pay on time, some financial institutions can send the bailiffs to your home and take your furniture and other possessions. They can cut off your electricity or gas supply or take you to court. Getting a debt settlement is one way to deal with it and improve your financial situation. At the same time, there are some disadvantages to consolidating your loans, one being that you may end up with a bigger loan over a longer period of time. If you opt for a secured loan and are unable to keep up your monthly payments, your house will be at risk of repossession. Most lenders will offer you a secured credit at a higher interest rate if you have poor credit. Finally, there are extra charges for setting up the debt settlement.