Common mistakes that people who consolidate loans make are:-
• Taking a low interest loan to solve the problem of a high interest loan
• Refinancing an existing property in a hope to revive soon.
• Rolling one debt in to another, making the other debt more pregnant.

Taking a low interest loan to solve the problem of a high interest loan can sound sensible.  But the end result may not be the same for all people.  Of statically people are going to stop being further manipulating the new low interest loan for some other repayment, and then it should be a fair practice to consolidate loans with low rate loans for high rate loans.  But that does not happen always.  I get a low interest rate loan to repay my credit cards.  But I will be still left with one more card to kill.  This by itself leaves the motive of the primary loan ruined.  Then following such when there is going to be further debt torture I am going to take a personal loan to repay the credit card loans and the low interest loan and spend the rest of the remaining money from the new loan for something else.  The idea to consolidate loans is fine, but the wrong manipulation is that which pulls in more trouble.

Refinancing an existing property in a hope to consolidate loans can sometime turn a debt trap. Like you mortgage your title or your home keys to solve your small debts and land up sinking your home in the debt sea! Think twice about mortgage to see if it will leave you from nothing.  When selling a property is going to help you abolish the problem forever with some little money left, better do it rather than mortgaging and living in debt forever.

Rolling one debt in to another, making the other debt more pregnant and this is the major reason for recession.  Creating a new loan pregnancy from a smaller loan in an attempt to consolidate loans can be dangerous.  Such kind of debt pregnancy can simply explode and burst one day.

But there is a right way to consolidating above said approaches and that needs some counseling.