Debt Consolidation in Canada: Loans, Costs & Questions to Ask
Combining payments can simplify a budget. Compare the total borrowing cost, repayment term and security before replacing existing debts with a new credit product.
Debt consolidation combines selected debts through a new credit product. You may have fewer payments to manage, but the new payment is only one part of the comparison. A longer repayment period can cost more overall, even if the monthly amount is smaller.
Compare the full terms
List the amount borrowed, interest rate, fees, payment frequency and term. Check for optional products financed into the balance and ask whether a rate can change. Compare offers on the same amount of borrowing and include the debts that remain outside the loan.
Understand any new security
A product secured by a home or another asset changes the risk compared with unsecured borrowing. A lower rate does not remove that consequence. Ask what rights the lender has if payments are missed and whether a co-signer is required.
Plan beyond the payout
Ask how old creditors will be paid and how the balances will be confirmed. Check whether the ongoing budget works without borrowing again from the old accounts. Consolidation does not remove the original principal simply by changing the number of payments.
One payment is a feature, not a complete answer
Compare affordability, total cost, risks and the reason balances were growing before choosing.
Our consolidation loan questions help you review a written offer. If the loan is unavailable or unaffordable, ask a qualified professional about the wider range of options.
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