However, such consolidation loans have costs: fees, interest, and "points" where one point equals to one percent of the amount borrowed.In some countries, these loans may provide certain tax advantages.
It's important to check all of the other options available and make sure you're making the right choice.
One is to consolidate all their credit card payments onto one new credit card – which can be a good idea if the card charges little or no interest for a period of time – or utilize an existing credit card's balance transfer feature (especially if it's offering a special promotion on the transaction).
Home equity loans or home equity lines of credit are another form of consolidation sought by some people, as the interest on this type of loan is deductible for borrowers taxpayers who itemize their deductions.
In many countries, especially the United States and the United Kingdom, student loans can be a significant portion of debt but are usually regulated differently than other debt.
The bulk of the consumer debt, especially that with a high interest, is repaid by a new loan.