When you have several loans, it can be easier to pay them by turning them into a single one - a debt consolidation loan.
A bank or other lender first authorizes and provides you with a new loan that you then use to pay off your outstanding balances. You repay it on a monthly basis, but now you're working with one payment per month. Sometimes these are secured with your home. In general, you'll replace your old loan's interest rate with a new, lower one.
These loans will be in one of two categories: secured and unsecured. Secured loans are those backed by property you own, like a house or a car. Unsecured are backed by your promise to repay them.
Different Kinds of Consolidation Loans
Finance companies began increasing advertising of debt consolidation services in the 1950s and 1960s. By the 1990s, it had become common. Here are what some of the options look like:
Bank/Credit Union Personal Loan or Home Equity Line of Credit (Secured):
Home equity loans tend to have fixed interest rates and must be repaid over a set number of months. A Home Equity Line of Credit (HELOC) typically has a variable interest rate, which means the rate changes over time, and as long as you make your payments you can borrow against your home's equity. You'll often need a minimum credit score - typically starting in the high 600s - to qualify for them.