Debt Consolidation

Business, Legal & Accounting Glossary

Definition: Debt Consolidation


Quick Summary of Debt Consolidation


Borrowers with a number of different loans – usually which are unsecured (not secured on the property) – may find that they can replace these loans with a single loan secured on the property. This can often reduce the borrower’s monthly outgoings by paying only one loan which is secured on the property, sometimes over a longer-term.



Full Definition of Debt Consolidation


Debt consolidation is the replacement of several small debts with one larger debt. There are several reasons for debt consolidation; a primary reason for debt consolidation is to restructure multiple high-interest debts into one lower-interest debt with a lower overall monthly payment. Another reason for debt consolidation is to extend the length of time of debt repayments with a new loan, thereby reducing the amount of the monthly payment. Debt consolidation can also be a way to turn variable-rate loans into a fixed-rate loan. For some people, the convenience of only having to service one loan as opposed to multiple loans is a sufficient reason to take out a debt consolidation loan. One of the most common sources for a low-interest debt consolidation loan is a second mortgage on a home or other real estate, although any new source of financing with a lower rate of interest than your combined current loans is a possible source of debt consolidation.

 


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Debt Consolidation. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. July 11, 2020 https://payrollheaven.com/define/debt-consolidation/.
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Debt Consolidation. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/debt-consolidation/ (accessed: July 11, 2020).
American Psychological Association (APA):
Debt Consolidation. PayrollHeaven.com. Retrieved July 11, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/debt-consolidation/

Definition Sources


Definitions for Debt Consolidation are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 15th February, 2020 | 3 Views.