Debt · Canada
Debt consolidation.
Compare your existing debts against a single consolidated loan. See potential monthly and lifetime interest savings before you commit.
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What is debt consolidation?
Debt consolidation is the process of combining multiple debts into a single loan, typically with a lower interest rate and a single monthly payment. This can simplify finances and save money on interest.
Benefits
- Lower monthly payment via lower rate or longer term.
- Simplified finances: one payment instead of many.
- Lower interest rate than typical credit cards.
- Fixed payoff date: know when you're debt-free.
Things to consider
- Origination or application fees on some loans.
- Longer term can mean more total interest even with a lower rate.
- Consolidation won't help if new debt keeps accumulating.
- Some loans require collateral (e.g. home equity).
- Best rates require good credit.
TNAADO Inc. · Toronto
Consolidation lowers the rate; it does not remove the debt
Consolidation replaces several balances with one at a lower rate. The saving is real and comes from two places: the lower interest rate, and a fixed amortization that forces the balance down instead of letting a minimum payment hold it roughly steady. Whether total cost actually falls depends on the term as much as the rate, because a lower rate stretched over a longer term routinely costs more in total than the debts it replaced.
The mistake people make. Consolidating and leaving the cards open. The balances go to zero, the limits do not, and the common outcome is a consolidation loan plus rebuilt card balances inside two years. The second issue is what the new loan is secured against: rolling unsecured debt into a mortgage or a HELOC lowers the rate and turns a debt your house was never at risk for into one it is.
Disclaimer
This calculator provides estimates for educational and informational purposes only. Actual loan terms, rates, and savings will vary based on your creditworthiness, lender policies, and current market conditions. Consider consulting a financial advisor or non-profit credit counselor before consolidating.