Beware of the Debt Consolidation Loan
The problem with a debt consolidation loan is that it does not necessarily eliminate the debt. In fact in most people’s cases it simply frees them up to spend even more money and get even deeper into hock.
The intent of a debt consolidation loan is to give you enough money to pay off all of your credit cards. The problem is that people who are broke enough to have to apply for this type of loan usually need to use the credit cards again. The debt consolidation loan is just a temporary fix for the problem and a lousy and expensive one at that.
In general it is recommended that you stay away from debt consolidation loans. The only exception is that you can consolidate your debt using a home equity loan. Although you could risk losing your home if you default on this loan this type of loan is tax deductible in many states and provinces in North America. Because of this the best type of use for this type of loan is for a real estate investment.