The Benefits of Loan Consolidation
Minimum payments on credit card bills can drive a household budget into the ground. Loan consolidation allows you to roll all of your debt into a single monthly payment. In most cases, a loan consolidation lender can make your monthly payment far lower than the sum of your current credit card bills, while still saving you money on interest payments.
Loan consolidation also provides the security of locking in a lower interest rate. Many credit card bills now threaten to spike interest rates as high as thirty or forty percent for consumers that make a late payment on any of their accounts, even at different lenders. Loan consolidation reduces the risk that a late or lost payment might impact your overall credit profile.
Credit card bills often carry some of the highest interest rates of any kind of debt. If you're ready to reduce or eliminate the number of cards you carry, you can also consolidate debt with a low interest home equity loan. This kind of debt relief works best when your overall budget is under control, which prevents any risk to your home.
Loan consolidation for student loan debt has its own benefits. While experts advise against combining student loan debt with other debt, you can still combine your educational loans into a single loan consolidation package. Your consolidated student loan debt program carries the same protections and benefits as your individual student loans, but with a lower interest rate and a much smaller monthly payment.
A number of non-profit debt counseling agencies have popped up to offer loan consolidation programs. Reputable non-profit debt counselors can help you look at a number of options, including loan consolidation programs at lenders with whom you already hold accounts. Consolidating your debt with a single lender, such as your bank or your credit union, can also make it easier to obtain other kinds of credit from that lender in the future.Sources