Apply to Consolidate Your Debt →
What is a debt consolidation loan?
It’s a personal loan used to pay off several existing debts — credit cards, lines of credit, other loans — so you’re left with just one payment to a single lender. The goal is to simplify your finances and reduce the interest you pay overall.
How it works step by step
- Add up the debts you want to combine and their interest rates.
- Apply for a consolidation loan large enough to cover them.
- Use the funds to pay off each debt in full.
- Make one fixed monthly payment on the new loan.
The benefits
- One payment instead of several due dates.
- Potentially lower interest than credit cards.
- A fixed payoff date so you know when you’ll be debt-free.
- Less stress and easier budgeting.
The trade-offs
- You need decent credit for the best rates.
- A longer term can mean more total interest if you’re not careful.
- It doesn’t fix overspending — the habits matter too.
Typical rates and what to expect
Consolidation loan rates depend heavily on your credit. Borrowers with strong credit can secure rates well below typical credit-card APRs, while those with weaker credit pay more. The key test: the new loan should cost less overall than keeping your current debts.
Is debt consolidation right for you?
It works best when you have multiple high-interest debts, a steady income, and the discipline to avoid running balances back up. If your debt is unmanageable relative to your income, other solutions — like credit counselling or a consumer proposal — may fit better.
Frequently asked questions
Does consolidation hurt my credit? There may be a small short-term dip from the application, but on-time payments help your score over time.
What debts can I consolidate? Typically credit cards, lines of credit, payday loans and other personal loans.
Can I consolidate with bad credit? Yes, though rates are higher — see our bad-credit consolidation guide.
Simplify your debt today. Compare consolidation loans →
Disclaimer: LoanWave.ca is an affiliate / comparison website. We are not a lender and do not provide loans. We may earn a commission from partners. Rates and terms are set by lenders. Informational content only, not financial advice.