These loans, often unsecured, are based on the personal relationship rather than collateral. In a federal student loan consolidation, existing loans are purchased by the Department of Education.
Most debt consolidation loans are offered from lending institutions and secured as a second mortgage or home equity line of credit.
You might end up hurting your credit or spending more money than you would if you just paid off your cards.
Consolidation makes the most sense when: It’s a good idea to figure out how much you’ll really save if you consolidate your credit cards.
In some countries, these loans may provide certain tax advantages.
Because they are secured, a lender can attempt to seize property if the borrower goes into default.