Canada's Debt Consolidation Options
- Consolidate using a Debt Consolidation Loan
- Consolidate using a Home Equity Loan / Refinance Mortgage / Second Mortgage
- Consolidate using a Line of Credit or Overdraft
- Consolidate debt on your Credit Cards
- Consolidate using a Debt Management Program
- Consolidate by doing a Debt Settlement
- File a Consumer Proposal
- Consolidate by Borrowing from Family or Friends
Consolidate using a Debt Consolidation Loan
A debt consolidation loan is where a bank, credit union or finance company provides you with the money to pay off your outstanding debts and "consolidate" them (bring them all together) into one big loan. This usually provides you with three advantages:
Advantages of a Debt Consolidation Loan
- You only have one monthly payment to worry about
- You often consolidate at a lower interest rate which saves you money
- Your debt will be paid off in a set amount of time (typically 2 -5 years)
- Any fees charged for this service are usually very low
Disadvantages of a Debt Consolidation Loan
- They usually require security (collateral)
- You must have a decent credit score
- Interest rates are higher than a home equity loan (refinancing your home)
- Interest rates for unsecured debt consolidation loans can be high