Which term describes combining several loans into one to simplify repayment?

• A. Bankruptcy
• B. Debt consolidation
• C. Deferrment
• D. Delinquent

Answer: (B)

Debt consolidation is when you combine multiple loans into one loan so you only have to make a single payment each month. This simplifies repayment by giving you one due date, one interest rate, and one monthly amount to manage. It’s often done with a consolidation loan or by transferring balances to one account. The main benefit is easier budgeting and potentially a lower monthly payment if you extend the repayment term, though total interest could rise if the loan lasts longer. It’s not the same as bankruptcy, which is a legal process to discharge or reorganize debts; it doesn’t mean you’re deferring payments for a period (deferral) or that you’re already behind (delinquent).