If you are not carefully managing your finances in this fast-paced life of UAE, there is a strong possibility that you will soon find yourself totally racked up with several personal loans or credit cards from different banks and you need more loans to keep up with the easy monthly installments of your previous loans. This is where Consolidation Loans come into play; they can remove a lot of hassle from your head and ease up your debt situation. Loans Consolidation, Debt Consolidation or Re-Financing are different names of the same service offered by different banks. This services allows you to merge all your debts (even from different banks) into one bigger loan balance which you can pay with easy monthly installment, this way instead of paying multiple bills each month, you will only be paying one bill each month. For some, this solution comes as a dream solution to get rid of their money woes, as the monthly payments are now smaller, manageable and consolidated into one only. Emirates NBD offers a very comprehensive consolidation loan of upto 800,000 AED to Expats & upto 3 Million to UAE Nationals at a reducing rate of 6.66%. Whereas, Commercial Bank of Dubai offers consolidation loan of upto 700,000 AED to Expats & 2 Million AED to UAE Nationals, at a reducing rate of 6.5%. But again, this is no solution to poor finance management, you will end up in worst situation after taking a consolidation loan if you don't learn to manage your finances properly. Goal should be to take the debt consolidation to ease up your situation and then manage your finances responsibility to keep up with the monthly installments. What you are basically doing, by taking this consolidation loan is to take a low-cost credit in exchange of your high-cost credit to ease up some money for your monthly expenses, but if you don't manage your finances sensibly even after taking this loan, you will actually end up in more financial problems than before. So What Exactly Is the Catch? Even though this new consolidated loan will ease up your monthly payment and make them a bit smaller, but it will surely increase the repayment period for you, hence it is critical to be sure that the loan deal you are getting would put you into a better financial position compared to your current situation, otherwise you don't need the consolidation. Doing proper research and talking to different banks regarding their offers, rates, repayment terms, etc should always be the starting point. By taking this consolidated loan, you are ACTUALLY PAYING MORE TO BANK, but since this bigger amount is divided into further smaller payments, it might look as a good deal to most people going through financial crisis. You need to check with your bank that the loan you are taking is flat or reducing? If you don't understand the difference between these two types of loans, than do proper research and try to understand every bit about it before taking the loan. Although Flat rate seems cheaper and better solution, they are not always the most cost-effective solution, as flat rate is calculated on the whole loan amount, while reducing rate is calculated each month on the outstanding balance that you have. Also the bank, may ask an upfront fees in order to arrange and process your refinance, which is usually 1% of the loan amount. Again, you have to shop around and contact multiple banks to get the best deal possible.