Debt consolidation loans are a popular financial strategy for managing multiple debts by combining them into a single loan with one monthly payment. This approach can simplify your finances, potentially lower interest rates, and help you pay off debt faster if used wisely. Typically, you take out a new loan—often unsecured or secured against assets like your home—to pay off existing debts such as credit cards, medical bills, or personal loans. The key benefit is replacing high-interest debts with a lower-rate option, but it's not a magic fix; it doesn't reduce the principal amount owed and requires discipline to avoid new debt. Eligibility depends on your credit score, income, and debt-to-income ratio, with good credit often securing better terms. However, risks include potential credit score impacts from hard inquiries, longer repayment terms that increase total interest paid, and fees. Before pursuing consolidation, compare lenders, understand the pros and cons, and consider alternatives like debt management plans. This quiz tests your knowledge—only 3% truly grasp it!