A debt consolidation loan is a loan taken out in order to pay off a number of other loans. Debt consolidation has many benefits, including a lower interest rate, reduction of monthly payments, and the ease of an individual loan.
Often debt consolidation involves a secured loan against an asset that serves as collateral, most commonly a house. This is a very common tactic among corporations and individuals with bad credit. When someone is paying credit card debt, debt consolidation is often advised because credit cards can carry a much more significant interest rate than a singular unsecured loan.