Each one is essentially a contract where you borrow money and then agree to pay it back over a period of time with set payments.

So to combine or consolidate debts, you actually need to get a new, larger loan and then use the money from it to pay off all the smaller loans you wish to consolidate (bring together).

A debt consolidation loan is a single loan (generally from a financial institution) that allows you to repay your debts to several or all of your creditors at once.

You are then left with only one outstanding loan — to the financial institution.

People use Debt consolidation loans are issued by banks, credit unions, and finance companies.

There are also some debt repayment programs for people who are having trouble paying their debts that effectively consolidate all debt payments into one payment.

For an exact penalty calculation, contact your lender directly.

Of the 10% of Canadians who refinanced their mortgages last year, 62% cited debt consolidation or repayment as the main reason for their refinance.student loan is subject to completion of a loan application/consumer credit agreement, verification of application information, credit qualification, and a benefit to borrower determination.*Disclaimer: Please note that the calculation results are estimates based on our most up-to-date information sourced from lenders’ publicly stated methodology and first-hand accounts. The results do not include special offers, such as cash back incentives, or any discharge, registration, reinvestment or transfer fees you may also incur.Contact several financial institutions before you choose a consolidation loan since the interest rates offered by competing financial institutions may vary.This option may be suitable for debts such as those relating to credit cards, public utilities or other consumer loans.In addition to streamlining your debts into a single payment, a debt consolidation loan may also offer you an interest rate that is lower than that charged by your creditors saving you money in interest charges.