How Does a Debt Consolidation Loan Work to Pay off Debt?
A debt consolidation loan pays off debt because a lender will loan you the money you need to pay off your existing debt. For example, if you have 3 credit cards and owe a combined $20,000 on them, when you ask your lender for a consolidation loan, they will lend you the $20,000 if you qualify. Then they will typically pay off your existing credit cards with the money, close those credit card accounts, and have you make one monthly payment to them for the $20,000 you borrowed.
Unfortunately, what can happen is that if you don’t have a realistic household budget that you actively use, you’ll be struggling again and reapplying for new credit cards after a few months of making loan payments. When this happens, you can actually end up doubling your debt rather than paying it off with a consolidation loan.
Declined for a Loan?
Here are 5 reasons why people are declined for a consolidation loan, and what to do instead.
Mistakes to Avoid
Here are 4 common debt consolidation mistakes, how to avoid them, and where to get help.
Debt Management Program
You’re not alone if you’re wondering if a DMP is right for you. Here’s what it is and how it works.