A consolidation loan is a type of loan that allows you to combine multiple debts into one single loan. This can include credit card balances, personal loans, medical bills or any other types of unsecured debt. The purpose of this loan is to simplify the repayment process by having only one monthly payment instead of several payments spread out over different lenders.
The interest rate on a consolidation loan is usually lower than the average interest rates of the individual loans being combined, which can help you save money in the long run. Additionally, this type of loan often comes with a longer repayment term, allowing for smaller monthly payments that may be more manageable for borrowers.
Overall, consolidation loans are designed to make it easier and more convenient for individuals to manage their debt by combining multiple obligations into one single payment.