What is a Debt Consolidation?

Debt consolidation refers to the act of taking out a new loan to pay off other liabilities and consumer debts https://www.investopedia.com/terms/c/consumer-debt.asp. Multiple debts are combined into a single, larger debt, such as a loan, usually with more favorable payoff terms—a lower interest rate, lower monthly payment, or both. Debt consolidation can be used as a tool to deal with student loan debt, credit card debt https://www.investopedia.com/terms/c/credit-card-debt.asp, and other liabilities.