Legal Definitions - consolidation loan

A consolidation loan is a type of loan that is used to pay off multiple individual loans, resulting in a more manageable debt. For example, if someone has three different loans with different interest rates and payment schedules, they can take out a consolidation loan to pay off all three loans and have only one loan to pay back.

For instance, if someone has a car loan, a credit card debt, and a personal loan, they can take out a consolidation loan to pay off all three debts. This way, they will only have one loan to pay back, with a single interest rate and payment schedule.

Consolidation loans are helpful for people who have multiple debts and want to simplify their finances. They can also help people save money on interest payments, as consolidation loans often have lower interest rates than credit cards and other types of loans.