The debt consolidation loans help you merge all your debts into one loan. For example, you have a loan with a balance of € 2,500 (interest rate of 15%), a balance in the credit card of € 1,000 (interest rate of 12%) and a balance on a card purchase of a trade of 500 € (10% interest). It would consolidate all such amounts on a loan of € 4,000 (8% interest).
Actually the purpose is to reduce monthly payments, as interest rates or lower in the new loan or the repayment period is lengthened.
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