In this Guide: What Is a Debt Consolidation Loan? · How To Get a Debt Consolidation Loan · Applying For a Debt Consolidation Loan · Pros and Cons of Debt Consolidation Loans · Is a Debt Consolidation Loan Right for You? · The Bottom Line: Qualifying for a Debt Consolidation Loan · FAQs
Updated Jul 11, 2024 ; Written by Amrita Jayakumar ; Edited by Kim Lowe ; Co-written by Jackie Veling
, Credit cards, Debt consolidation loan ; APR, 23%., 15%. ; Monthly payment, $300., $278. ; Payoff period, 4.5 years., 4 years. ; Interest paid, $6,200., $3,359.
Debt consolidation can simplify your debt payments and substantially lower your interest charges. However, it can lead to more debt if you don't have a solid plan to avoid racking up debt...
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Debt consolidation is combining several loans into one new loan, often with a lower interest rate. It can reduce your borrowing costs but also has some pitfalls.
Key takeaways ; Debt consolidation may allow you to repay your debt faster and at a lower cost, simplifying your finances. ; The upfront costs associated with debt consolidation can eat into the savings associated with taking this step. ; If you have a good credit score or better, want to simplify your finances, prefer fixed payments and can afford the monthly cost, debt consolidation may be a good option.
Between credit cards, student loans and auto loans, it can be difficult to keep track of payments and balances on outstanding debts. Consolidating these debts into a single loan may streamline your finances, but the strategy likely won’t fix underlying financial challenges. For that reason, it’s important to understand the pros and cons of debt consolidation before committing to a new loan. To help you decide whether debt consolidation is the right way to pay off your loans, we’ll walk you through the advantages and disadvantages of this ...