Finance Glossary
Debt Consolidation
The process of combining multiple debts into a single loan, typically with one monthly payment and ideally a lower overall interest rate. Debt consolidation can simplify repayment and reduce monthly outgoings, but it is important to check that the total cost of the consolidation loan does not exceed the combined cost of the existing debts.
Example
A borrower with three separate debts totalling £4,500 takes a single consolidation loan at a lower rate, replacing three payments with one.
Related terms
Debt Consolidation Loan
A single loan taken out to pay off multiple existing debts, …
Refinancing
The process of replacing an existing loan with a new loan — …
Interest Rate
The percentage of the loan principal charged by a lender for…
Total Amount Repayable
The complete sum you will pay back over the life of a loan, …
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