Skip to main content

Find out if a Debt Consolidation Loan is right for you

By: Kiana Wright, Assistant Vice President of Consumer Lending

Posted on 10/24/2018 3:00:00 PM

Ready to let go of some of that debt? Whether it is high-interest credit card debt from your summer vacation or back-to-school shopping, or simply debt that’s built up over time, debt consolidation can offer a solution. Organize your debt to make it easier to pay while reducing the overall costs. Here’s what you can expect.

What Is Debt Consolidation?

The simplest description of debt consolidation is an opportunity to roll most of your existing debt into one, single monthly payment. You can include high-interest loans, credit card debt, and other debts you owe. Several types of debt consolidation exist, but in most situations, it involves obtaining a new loan to pay off your existing loan.

What Are the Benefits of Debt Consolidation?

Many people spend nights awake worrying about how they will pay each one of their bills. Yet, paying the monthly payment on your debts means you’ll be paying back money for years, even a decade. Instead, consider how debt consolidation can work to help you pay off your debt faster and often for significantly less money.

Simplify Your Debt

One of the complications of having multiple loans is having to make numerous monthly payments. It is easy to forget one, which can hurt your credit score. In addition, when you can only make the minimum payment on each loan, you don’t get far paying down the debt. If you had just one loan payment to make, you could pay off your debt faster without the risk of missing a payment. In short, it makes budgeting easier to have just one loan to repay.

Lower Your Interest Rates

Many people benefit from debt consolidation because it can slash your interest rate significantly. If you are paying high-interest debt, such as credit cards, each month, you may be able to secure a new, lower interest rate loan. A lower rate means you pay less on the debt overall. This means you’ll get out from under your debt sooner without the added costs associated with high-interest rates.

Create an Affordable Payment Plan

You can choose the right payment plan for your needs. Do you have a line of credit with a significantly higher interest rate? With debt consolidation, you may be able to stretch out those payments a bit, significantly lowering your monthly payment.

Pay Off Debt Faster

As noted, debt consolidation is designed to give you the chance to pay back your debt faster. Imagine being able to put all of those individual minimum payments towards a single debt. You would be able to pay it off faster. With debt consolidation, you can do that.

How Does Debt Consolidation Work?

How does it work and when can you get started? Debt consolidation requires you to apply for and obtain a new loan. Then, the proceeds from this loan are used to pay off your existing debt. It’s a fast and easy way to get the help you need.

Choose Which Bills to Pay Off

To get started, determine which bills you want to pay off. It could be those with high-interest rates or those that have a high balance. There may be some creditors you do not want to work with on a long-term basis. Choose those to consolidate. Add up the balances of all of your unsecured debt – credit cards, personal loans, and other bills you have.

Apply for a Debt Consolidation Loan

You can then apply for a debt consolidation loan. You will be able to see the interest rate available to you and how much you can borrow. With this information, you can make a decision about how well this type of loan can work for your needs. Be sure to look at the details, including how much you’ll save with the consolidation loan versus the way you are paying off your debt right now.

Enjoy One Low, Fixed Monthly Payment

Finally, consider your options. You may be able to select a monthly payment that is right for your needs. Once you do, you can formally apply and get your existing debts paid off. Then, you can begin working toward paying back the single loan you now have each month.

Is Debt Consolidation the Right Option for Me?

Are you wondering how well debt consolidation can work right now for your needs? It's easy to find out. Use our debt consolidation calculator to determine what you can expect from a new loan. Enter the information required and see just how much you could pay a month through consolidation.

Debt consolidation is an opportunity to save money for many people. Consider what it is like to have all of your debt in a single, fixed, low-interest loan that you can afford to pay easily each month. It makes it easier to meet your financial goals and, over time, making those payments on time can even help you boost your credit score.

Ready to learn more? Check out our current debt consolidation loan options.

Apply for Debt Consolidation

Rev. 1.22

Don't miss another article

Stay up to date with the latest financial tips and news. Subscribe to our blog.