Can my debt consolidation loan agreements have adjustable or variable interest rates?

There are many advantages of debt consolidation. Debt consolidation is simply a process wherein you take on a loan and you use the proceeds from that loan in order to repay several debts you currently have. The major benefit is that multiple loans become one, and that the new loan usually has better terms than the loans you paid off. Other advantages may include a lower monthly payment and the ability to pay off your debts faster.

However, you also need to understand exactly what you are getting into when you take on a debt consolidation loan. Almost any type of loan can, in a sense, be a debt consolidation loan if you use the money to pay off debts. This can include a personal loan, a credit card balance transfer, or even a second mortgage on your house. There are also specialized  Because there are so many different types of loans that can be used to consolidate debt, the loan you choose may have either an adjustable/variable interest rate or a fixed rate, depending on which type you pick. 

Understanding the difference, therefore, is of paramount importance:

• A variable interest rate means the interest rate on your loan can change. The interest rate is usually tied to a financial index, like the LIBOR index for example
• A fixed interest rate means the interest rate and payments won't change (as long as you don't borrow more). This is generally the safer option

If you are considering a debt consolidation loan, you should strongly consider speaking to a lawyer. Your attorney can help you to understand your rights and obligations and can help you to choose the best loan for your situation.