Debt consolidation loans are a viable option for Canadians seeking to be debt free. Individuals owing money to multiple creditors (such as credit card, charge companies and/or public utilities) should consider a consolidation loan as an option to manage and eliminate debt.

It is a loan from a Canadian bank or other financial institution that allows customers to repay debts to multiple creditors via one single monthly payment to said financial institution. Typically the customer will ask the financial institution for a loan amount equal to the total amount of money owed to the customer’s various creditors. If the loan is approved, the bank will settle the customer’s debts and the customer needs only to be concerned with paying back the one debt consolidation loan.

Depending on the type of consolidation loan, the customer may also benefit from a lower interest rate than that offered by the other creditors. This interest rate varies from bank to bank and should be researched before committing to a debt consolidation loan.