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Debt Consolidation

Find out how to merge all your payments into one monthly installment and keep your credit score intact.

Debt consolidation is a loan granted by your financial institution to reimburse all your creditors. Your payments are merged into one monthly installment payable over a maximum period of 5 years. The interest rate is usually between 12% and 14% per year but it will not affect your credit rating.

If the financial institution refuses to grant you such a loan or if the required monthly payments are too expensive for your budget, the consumer proposal may prove to be a very interesting alternative.


A good option for you if:

  • Your credit rating is good (to obtain the loan);
  • You have the financial capacity to reimburse the monthly payments for the loan.

What are the benefits?

  • You will be debt-free after 5 years;
  • Only one payment per month, so easier to manage;
  • Interest rate (12%-14%) lower than credit cards;
  • No impact on your credit rating.

Requirements for a consolidation loan

  1. A debt ratio below 40%;
  2. A good credit rating i.e. very few or no late payments;
  3. Stable employment;
  4. Financial capacity to pay the monthly loan installment.

Your questions

Firstly, by paying your creditors, the financial institution assumes, alone, the risk that each of your creditor had in regards to their individual debt. Therefore, they would be the only one to lose if, by unfortunate circumstances, you became unable to pay.

Secondly, they fear that you might be tempted to incur new debt after your consolidation loan. In fact, once repaid, your former creditors will not hesitate to solicit your business again. New debt on your part would add to your monthly consolidation payments and increase the risk of financial difficulties.