Loan consolidation is a financial strategy where multiple loans are combined into a single, new loan with a fixed or variable interest rate. This process can simplify repayment by reducing the number of monthly payments and potentially lowering the overall interest rate. Typically, borrowers consolidate loans to streamline their finances, manage repayment more efficiently, and potentially reduce their monthly payments. In some cases, loan consolidation may also offer extended repayment terms, providing borrowers with more flexibility in managing their debt. However, it’s important to carefully consider the terms and implications of loan consolidation, as it may not always result in cost savings and could extend the time it takes to repay the debt.
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This glossary post was last updated: 29th March 2024.
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