What is the interest rate of the loan? The interest rate should be less than what you are currently paying on your debt. However, realize that you may be able to negotiate lower interest rates on your current accounts by contacting your creditors.

What is the length and terms of the loan? Often debt consolidation loans offer low attractive monthly payments by extending the loan for a number of years. In these cases, you can end up paying substantial sums in interest. Calculate how much your total payments will be and ask for a breakdown of principal and interest.

Am I swapping unsecured debt for secured debt? When you get a home equity loan, you take out a loan against the equity you own in your home. The advantage of this type of loan is that the interest charges are often tax deductible. However, you are putting your home at risk for foreclosure if you are unable to make the payments.

Am I willing to make lifestyle changes? All too often, people take out these types of loans, only to run up their credit card balances within a year or two. To be successful, you have to make significant lifestyle changes and alter your spending patterns.