If you’ve ever looked into how to pay off debt, you’ve probably come across debt consolidation. What you may not know is that there are many methods of debt consolidation, each with its pros and cons.
A debt consolidation loan is used to combine multiple debts into a single, larger debt. It could have more favorable terms; instead of having numerous payments, you could have just one recurring monthly payment. There are many benefits that could come with consolidating your debt. Here are some of the more important ones:
Debt can feel daunting and sometimes impossible to pay down, especially when you’re juggling numerous bills and debts. You could pay off your debts faster by taking out a debt consolidation loan with a shorter term than your other debts. Because personal loans have fixed terms, you’ll know exactly when your last payment will be.
Managing numerous debts across a range of creditors can be a hassle. It’s easy to miss payments if you’re trying to manage multiple debts at once. By consolidating your debt, you could have one payment a month to a single creditor. This could significantly reduce the amount of bills you have to pay each month.
Depending on your method of debt consolidation, you could qualify for a lower interest rate than those on your credit cards. This could mean paying less in interest—and possibly saving some money along the way.