Debt consolidation loans in Canada: the options, the costs and what to ask
Quick summary
Debt consolidation means combining several debts into one payment. It can save money if the new rate is lower, and it can cost more if the repayment period is longer. Run your own numbers in the debt consolidation calculator.
Checked November 3, 2026. Main source: FCAC: Debt consolidation (modified Oct. 14, 2025). See all 1 source.
What it is
FCAC describes it as combining multiple debts into one so you make one payment instead of several. It may simplify your finances, and consolidating high-interest debt into a lower-interest product may save money.
Source: FCAC: Debt consolidation (modified Oct. 14, 2025).
Ways to consolidate
| Option | How FCAC describes it |
|---|---|
| Loans (personal, debt consolidation, home equity) | Regular payments, a fixed or variable rate and a set repayment period. |
| Lines of credit (personal, home equity) | You pay interest only on what you borrow. Usually a variable rate, and you often pay only interest each month, so you manage the principal yourself. |
| Credit card balance transfer | A lower or 0% introductory rate, usually for 6 to 18 months. A fee, usually a percentage of the transfer, typically applies, and you may lose the rate if you miss a payment. |
Source: FCAC: Debt consolidation (modified Oct. 14, 2025). FCAC says credit counselling agencies and Licensed Insolvency Trustees offer help with debt but do not provide consolidation products.
Pros and cons
- Pro: one payment instead of many.
- Pro: possible savings from a lower rate.
- Con: a longer repayment period may cost more interest overall.
- Con: you may only qualify for a higher rate than your current debts.
- Con: if the spending habits that caused the debt continue, debt can grow again.
- Con: applying with several lenders in a short time may lower your credit score.
Source: FCAC: Debt consolidation (modified Oct. 14, 2025).
What to do before you apply
- Get your credit reports first. Your credit history affects the rate you are offered.
- Ask which of your debts can be consolidated.
- Read the terms and conditions.
- Compare products and shop around for the lowest rate.
- Check that a debt consolidation company is legitimate. FCAC says regulation varies by province and territory.
Source: FCAC: Debt consolidation (modified Oct. 14, 2025).
See what a loan costs in total
Enter the amount, the rate, the length and any flat fee from an offer. A consolidation loan only helps if the total you repay is lower than what you would pay on the debts now.
You borrow $10,000 and repay $12,640 in total.
That is $263.34 a month. The interest alone is $2,640.
Every $1 you borrow costs $1.26 to repay. The cost of borrowing is $2,640.
Nothing you type here is saved or sent. These are estimates. Your lender's contract is the final word, and it may add fees or insurance.
Questions people ask
What is a debt consolidation loan?
A loan that pays off several debts so you make one payment. FCAC lists personal loans, debt consolidation loans and home equity loans.
Does debt consolidation hurt my credit score?
FCAC says applying with several lenders in a short time may lower your credit score.
How long does a balance transfer rate last?
FCAC says the lower or 0% rate usually lasts 6 to 18 months, and a transfer fee typically applies.
Is credit counselling the same as consolidation?
No. FCAC says credit counselling agencies and Licensed Insolvency Trustees offer help with debt but do not provide consolidation products.
Can consolidating cost me more?
Yes. FCAC says a longer repayment period may cost more interest overall, and you may only qualify for a higher rate than your current debts.
Try it with your numbers
Does your province have its own rules?
Who licenses collectors, how much of your pay can be taken and which agencies can help are set by each province. Pick yours to see where to look. We remember your choice on this device only.