When you decide to consolidate your loans, you need to make several decisions before making this major financial move. The first step is determining whether you need to make your loan secured or unsecured.
Unsecured loans are merely using your credit score as basis for granting the loan. On the other hand, secured loans need collateral to take effect. Your car, house, or any valuable asset can be legally repossessed once you defaulted (stopped making payments) to your loan. The advantage you get is lower interest rates. However, think very carefully whether the low interest rates would be worth the possible risk of losing your car or home.
Then, the next decision is choosing whether you will take out a consolidation loan with a finance company or bank, get a second mortgage, or take advantage of various credit card offers. Often, the best way to consolidate your loan is to go through a bank. However, if your credit score is low, banks may not be willing to grant your loan.
Credit score is usually based on your history of payments. So if you have a bad history, you can turn to finance companies instead. They are often willing to risk and lend money in exchange for high interest rates.
You can also get a second mortgage where your house will serve as collateral for your loan with the advantage of having a fixed interest rate. Or you can find credit card companies with 0% balance transfer fees as an alternative.