{"id":49118,"date":"2023-11-27T10:47:28","date_gmt":"2023-11-27T18:47:28","guid":{"rendered":"https:\/\/financer.com\/?page_id=49118"},"modified":"2024-11-28T20:41:58","modified_gmt":"2024-11-29T04:41:58","slug":"debt-consolidation","status":"publish","type":"page","link":"https:\/\/financer.com\/loans\/glossary\/debt-consolidation\/","title":{"rendered":"What is Debt Consolidation?"},"content":{"rendered":"\n

What is Debt Consolidation?<\/h2>\n\n\n\n

Debt consolidation is the process of combining multiple debts into a single loan with potentially lower interest rates and simpler monthly payments.<\/p>\n\n\n\n

It’s crucial to understand that debt consolidation doesn’t erase debt; it restructures it. The key purpose of debt consolidation is to make debt repayment more manageable and cost-effective, although it doesn’t reduce the overall amount owed.<\/strong><\/p>\n\n\n

Loans for Debt Consolidation<\/h3>\n
\n
\n
<\/div>\n
<\/div>\n
<\/div>\n <\/div>\n
\n
\n \n \n \n \n
\n \n Company <\/span>\n <\/th>\n \n \n Overall Rating <\/span>\n <\/th>\n \n Interest<\/span><\/th> Loan amount<\/span><\/th> \n \n <\/span>\n <\/th>\n <\/tr>\n <\/thead>\n
\n recommended<\/span>\n \n \"5KFunds\"\n <\/a><\/td>\n 4.2<\/span><\/a><\/td>5.99% – 35.99%<\/td>$500 – $35,000<\/td>\n See offer<\/a><\/td><\/tr>
\n recommended<\/span>\n \n \"PersonalLoans.com\"\n <\/a><\/td>\n 4.9<\/span><\/a><\/td>5.99% – 35.99%<\/td>$250 – $35,000<\/td>\n See offer<\/a><\/td><\/tr>
\n recommended<\/span>\n \n \"Upgrade\"\n <\/a><\/td>\n 3.6<\/span><\/a><\/td>9.99% – 35.99%<\/td>$1,000 – $50,000<\/td>\n See offer<\/a><\/td><\/tr>
\n recommended<\/span>\n \n \"Fast5KLoans\"\n <\/a><\/td>\n 4.3<\/span><\/a><\/td>5.99% – 35.99%<\/td>$100 – $5,000<\/td>\n See offer<\/a><\/td><\/tr>
\n \n \n \"Universal\n <\/a><\/td>\n 5.0<\/span><\/a><\/td>11.69% – 35.99%<\/td>$1,000 – $50,000<\/td>\n See offer<\/a><\/td><\/tr>
\n \n \n \"BadCreditLoans.com\"\n <\/a><\/td>\n 3.8<\/span><\/a><\/td>5.99% – 35.99%<\/td>$500 – $10,000<\/td>\n See offer<\/a><\/td><\/tr> <\/tbody>\n <\/table>\n <\/div>\n \n \n \n \n
\n \n Company <\/span>\n <\/th>\n <\/tr>\n <\/thead>\n
\n recommended<\/span>\n \n \"5KFunds\"\n <\/a><\/td><\/tr>
\n recommended<\/span>\n \n \"PersonalLoans.com\"\n <\/a><\/td><\/tr>
\n recommended<\/span>\n \n \"Upgrade\"\n <\/a><\/td><\/tr>
\n recommended<\/span>\n \n \"Fast5KLoans\"\n <\/a><\/td><\/tr>
\n \n \n \"Universal\n <\/a><\/td><\/tr>
\n \n \n \"BadCreditLoans.com\"\n <\/a><\/td><\/tr> <\/tbody>\n <\/table>\n \n \n \n \n
Get Started<\/th>\n <\/tr>\n <\/thead>\n
\n See offer<\/a><\/td><\/tr>
\n See offer<\/a><\/td><\/tr>
\n See offer<\/a><\/td><\/tr>
\n See offer<\/a><\/td><\/tr>
\n See offer<\/a><\/td><\/tr>
\n See offer<\/a><\/td><\/tr> <\/tbody>\n <\/table>\n \n \n \n \n
\n \n Company <\/span>\n <\/th>\n \n \n Overall Rating <\/span>\n <\/th>\n Interest<\/span><\/th> Loan amount<\/span><\/th> Get Started <\/th>\n <\/tr>\n <\/thead>\n
\n recommended<\/span>\n \n \"5KFunds\"\n <\/a><\/td>\n 4.2<\/span><\/a><\/td>5.99% – 35.99%<\/td>$500 – $35,000<\/td>\n See offer<\/a><\/td><\/tr>
\n recommended<\/span>\n \n \"PersonalLoans.com\"\n <\/a><\/td>\n 4.9<\/span><\/a><\/td>5.99% – 35.99%<\/td>$250 – $35,000<\/td>\n See offer<\/a><\/td><\/tr>
\n recommended<\/span>\n \n \"Upgrade\"\n <\/a><\/td>\n 3.6<\/span><\/a><\/td>9.99% – 35.99%<\/td>$1,000 – $50,000<\/td>\n See offer<\/a><\/td><\/tr>
\n recommended<\/span>\n \n \"Fast5KLoans\"\n <\/a><\/td>\n 4.3<\/span><\/a><\/td>5.99% – 35.99%<\/td>$100 – $5,000<\/td>\n See offer<\/a><\/td><\/tr>
\n \n \n \"Universal\n <\/a><\/td>\n 5.0<\/span><\/a><\/td>11.69% – 35.99%<\/td>$1,000 – $50,000<\/td>\n See offer<\/a><\/td><\/tr>
\n \n \n \"BadCreditLoans.com\"\n <\/a><\/td>\n 3.8<\/span><\/a><\/td>5.99% – 35.99%<\/td>$500 – $10,000<\/td>\n See offer<\/a><\/td><\/tr> <\/tbody>\n <\/table>\n <\/div>\n <\/div>\n\n <\/div>\n\n\n

How Does Debt Consolidation Work?<\/h2>\n\n\n\n
    \n
  1. Acquire a New Loan:<\/strong> Secure a loan large enough to cover all debts you wish to consolidate.<\/li>\n\n\n\n
  2. Repay Existing Debts:<\/strong> Use the new loan to pay off various debts, such as credit card balances, auto loans<\/a>, student loans, and personal loans.<\/li>\n\n\n\n
  3. Single Monthly Payment:<\/strong> Instead of multiple payments to different lenders, you’ll make one monthly payment on the new loan.<\/li>\n\n\n\n
  4. Potential Interest Savings:<\/strong> The new loan often has a lower interest rate than the average of your previous debts, potentially saving money over time.<\/li>\n\n\n\n
  5. Consider Repayment Duration:<\/strong> While monthly payments may decrease, extending the repayment period means you might remain in debt longer.<\/li>\n<\/ol>\n\n\n
    Compare Loans Now<\/a><\/div>\n\n\n\t\t

    Compare loans from 45 lenders<\/h3>

    Find the cheapest rate with one click<\/p>

    \n <\/span>\n <\/div>\n
    \n \n <\/div>\n<\/div>
    Compare Offers<\/a><\/div>\t\t<\/div>

    Different Methods to Consolidate Debt<\/h2>\n\n\n\n

    Balance Transfer Credit Cards<\/strong>: Some credit cards<\/a> offer introductory periods when they charge low or no interest on balances that you transfer to the card within a set period of time. This gives you an opportunity to save on interest and make more progress paying off your debt.<\/p>\n\n\n

    Best Credit Card Offers<\/a><\/div>\n\n\n

    Personal Loans<\/strong>: If you can get a personal loan with a lower interest rate, you can pay off your higher-interest credit card balances, which may allow you to pay off your debt faster.<\/p>\n\n\n\n

    Retirement Account Loans<\/strong>: You may be able to take a loan from your retirement account to consolidate and pay off debt. However, you need to be careful to pay it back according to the retirement plan\u2019s rules or you may face taxes and penalties.<\/p>\n\n\n\n

    Read More:<\/strong> 401(k) Loans: What You Need to Know<\/a><\/p>\n\n\n\n

    Home Equity Loan or Line of Credit<\/strong>: Homeowners who\u2019ve built up an ownership stake in their home may be able to take out a loan using their home as collateral. These secured loans<\/a> typically offer lower interest rates than credit cards or personal loans. But beware: If you don\u2019t pay it back, you could lose your home.<\/p>\n\n\n

    Best Personal Loans<\/a><\/div>\n\n\n

    Pros and Cons of Debt Consolidation<\/h2>\n\n\n\n

    Pros:<\/strong><\/h3>\n\n\n\n