A debt consolidation loan is a widely used strategy for alleviating serious debt problems. Simply put, the idea is to arrange an amount of less expensive finance which is then used to clear your existing debts, resulting in you having more easily made repayments and more cash left over to spend as you like.
 
There's no denying that a good consolidation loan can work wonders, but there are three central points to weigh up before committing yourself.
 
Firstly, although you might be making smaller repayments each month, this is normally the result of extending the repayments over a longer period. This will usually result in you paying back more in interest in the long term, making your borrowing costlier. It's your own decision if this is a price worth paying for the more immediate benefits it brings.
 
The next consideration is that most such loans are secured on your home. This means that your home is at risk of foreclosure if you get into difficulties repaying your loan. Think very carefully about the possible dangers involved in changing over unsecured credit into secured finance, particularly if you're not absolutely sure you can keep up with the repayments on the new loan down the line.
 
Last, once you've cleared all your debts, it can be very tempting to start out spending once again. This is probably the most serious error you could make, as you'll most likely end up needing to service a much bigger debt than you had originally before taking out your consolidation loan. Take away the temptation by closing down all your cleared credit lines, maybe leaving a smaller one intact for a rainy day.