What is a debt consolidation loan? It is a single loan that a consumer can use to roll all of their debt into one account. Most consumers have multiple debtors, and along with that they have multiple payments to make each month. Simply put, a debt consolidation loan is the process of taking multiple outstanding debts and consolidating them into one single loan.

The majority of the debt comes from consumer credit cards, which carry high interest rates. Rolling all of those credit card balances into one consolidated loan will allow the consumer to pay down the debt faster and also to pay less interest on the money owed. And often a consolidated loan will even have a lower monthly payment then the original payments!

One of the biggest advantages to choosing to consolidating debts is the fact that the consumer doesn’t have to juggle all of the bills every month. There is only one bill to pay each month, and you don’t have to worry about working with the individual creditors.

If you want to lower your loan interest rate even more, you might consider choosing a consolidation loan that uses your home equity. This will help you to lock in the lower interest rate, because there is collateral (the home) if for some reason the payments are not met.

Debt consolidation loans can be obtained in several different ways. Many banks and credit unions offer consolidation loans, so you may choose to talk with your local bank. Or, you can even receive a consolidation loan quote from the comfort of your own home. There are many online companies that offer great rates and are willing to work with you on a one-on-one basis via internet or phone.

Once you have obtained a consolidation loan, it is important that you change your spending habits and stay within a budget. Many people make the mistake of consolidating their debts, only to find themselves in the same situation again because of their over-spending on credit cards.

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