Debt Consolidation Loans
If you have multiple payments to different lenders, like credit cards or loans, you can apply for a debt consolidation loan to consolidate all your debt into one single lower monthly payment.
Debt Consolidation Loans
What Is Debt Consolidation?
Debt consolidation – not to be confused with debt settlement – is just like it sounds. It’s a simple way to use a personal loan to consolidate multiple unsecured debts (like credit cards, medical bills, payday loans) into one monthly bill. For example, instead of making payments to multiple creditors, you make a single payment to the lender of the debt consolidation loan instead.
Because personal loan rates can be lower than credit card rates (which have an average of around 15% APR), it’s possible to save a lot of money in interest rate payments. By extension, this could help lower monthly payments and/or pay down debt faster.
The best way to compare apples to apples is to get rates that are personalized to your current situation. It’s really simple – almost like searching for a flight or hotel
Debt Consolidation Loans Pros
- Potentially lower interest rates vs credit cards
- Easy application process
- Less risk since an unsecured personal loan isn’t tied to an asset
- Funds usually come through quickly
- Potential credit score increase
Debt Consolidation Loans Cons
- Sometimes lenders charge origination fees. Double check the numbers & do a bit of “comparison shopping” to make sure you get the best offer available.
- Teaser rates require a high credit score (somewhere between 780-850). Note that it’s pretty easy to get rates personalized to you.
- There aren’t many options available (if at all) for credit scores below 600.
