Glossary

Debt consolidation

Replacing several obligations with one.

Consolidation replaces multiple obligations with a single one, ideally with a longer term and lower total cost. For stacked advances, consolidating into a term loan, line, or asset-based facility can restore cash flow; consolidating into another advance rarely lowers total cost. "Reverse consolidations" fund your existing debits with a new, longer advance and usually raise total cost while lowering weekly outflow.

How it appears in a contract

A new facility with payoff letters for each existing position; check that UCC-1 filings are terminated after payoff.

Worked example

Three advances debiting $4,100 a week replaced by a 3-year term loan at $6,200 a month lowers weekly outflow by more than half; whether it lowers total cost depends on the loan’s APR and fees, so compare the written totals.

Illustrative figures on stated assumptions; not quotes.

What to ask

• What is the total cost of the new facility versus letting the old ones run off?
• Are payoff discounts available from existing funders?
• Will the new lender require all positions to be paid at closing?

Related terms

Stacking · Renewal · UCC-1 · all terms