Debt Consolidation Loans
Debt Consolidation also called loan consolidation is the process of getting a single loan, to payoff several loans. The borrower can consolidate several unsecured loans into a single unsecured loan, or into a single secured loan (the consolidation loan is secured by an asset owned by the borrower). Many Canadian banks and financial institutions offer debt consolidation loans.

Why would you need a debt consolidation loan if you already have several loans? Isn't it better to just keep paying off the existing loans? This is a valid question, and there are several reasons why people take out on debt consolidation loans. The first and most important reason is that by consolidation all your debt you can get a lower interest rate, and thus lower your monthly payments. Another reason for getting a consolidation loan is to lock in a fixed interest rate. The third reason for consolidating your debt is that you are making your life easier, because you need to take care of only one loan versus several.

One of the cases when is smart to consolidate debt is if the consumer has a lot of credit card debt. Credit card debt is very expensive because of the high interest rates the credit card companies charge, and it only make sense to consolidate credit card debt into a single consolidation loan with lower interest rate and save money.

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