---
title: "Debt consolidation: definition | Desert Rock Capital"
url: "https://www.desertrockcapital.com/glossary/debt-consolidation"
description: "Debt consolidation is combining several debts into one new loan or balance with a single payment."
---

Loan structure

# Debt consolidation
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Definition

Debt consolidation is combining several debts into one new loan or balance with a single payment. It replaces multiple due dates and rates with one, and the overall cost depends on the terms of the new loan.

Debt consolidation rolls multiple existing balances into one new obligation so you make a single payment instead of several. It can be done with a debt consolidation loan, a balance-transfer credit card, or another credit product, and it replaces several due dates and rates with one. Whether consolidation changes the total cost depends on the interest rate, the fees, and the term of the new loan compared with the debts it replaces. The result can extend or shorten the time in repayment depending on the new term. Consolidation is distinct from debt settlement, which involves negotiating to repay less than the full amount owed.

Source: [Consumer Financial Protection Bureau](https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-credit-counseling-and-debt-settlement-debt-consolidation-or-credit-repair-en-1449/). This definition is general educational information, not legal or financial advice.
Related

- [Personal loans](/services/personal-loans)
- [Unsecured personal loans](/services/unsecured-personal-loans)
- [Compare: vs. credit card debt](/compare/credit-card-debt)
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