Consolidating loans pros and cons

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A report issued earlier this year by the US government was that the average credit card debt per household in the United States is ,607. In either event, you would use the money to pay off all of your other debts.

US households also have an average of ,656 in student loan debt and an average of 3,500 in mortgage debt. If your debts have spun out of control and you’re looking for some relief, there is a simple solution. This would leave you with just one monthly payment to make each month, which should be much less than the sum of the payments you’re currently making.

Loan consolidation means combining student loans from one or many lenders into one new loan from a single lender.

Loan consolidation won’t reduce your overall debt, but it may make your current monthly payment more manageable.

With a credit card consolidation loan, you work with a lender to combine all of your unsecured debt into one monthly payment.

Whether we like to admit it or not we have become a nation of debt junkies.

Since students must reapply for student loans every year, many have multiple student loans when they graduate.

This can make managing loan payments cumbersome and time-consuming. Here’s an introduction to loan consolidation — what it is, how it works, and the potential benefits and drawbacks.

How to know if consolidation loans make sense Before you rush off to your bank or credit union for a debt consolidation loan there are some things you need to know in order to understand whether it makes sense.

The first of these is that the interest rate on your debt consolidation loan should be lower than the rates of the debts you’re consolidating.

It is also a risky one, a debt relief option so fraught with misunderstanding and negatives that most financial experts would recommend it only as a last resort. You, or a representative negotiating for you, make an offer to your creditor to settle the debt for less than what is owed.

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