Disadvantages of a consolidation loan:   You may be tempted to continue using your credit cards and other credit privileges that led to the problem in the first place.   Your spending pattern may not change, since you may now believe that your creditors have been "paid"; or   You may actually be increasing the cost of your total debts (even though the interest rate charged may be lower, the payback period may be spread out over years instead of months, resulting in higher total interest charges). This would be the case in the event of re-mortgaging or a second mortgage.   If you are required to pledge additional security against the loan - for example, property - you can not sell this security without the creditor's permission. If you ask a friend or relative to co-sign a loan and you default on the loan, the creditor may demand payment from the co-signer. This can seriously affect your relationship with that person.