Loans and debt repayment programs function quite differently. With a loan, you borrow money to pay off debt. Then you pay off the loan plus interest.
With a repayment program, you use money in your budget and pay off your debts without borrowing more money. Instead, when you repay your debts through a repayment program with a non-profit credit counselling service, your lenders will typically reduce or completely waive interest and fees going forward.
That’s why you’re able to use the money in your budget more effectively and get out of debt more quickly.
A debt consolidation loan can often seem like a really good idea. Unfortunately, most people don’t reduce the overspending that created their debt, and so they need another consolidation loan once they finish paying off the first one.