A debt consolidation loan program is simply a process by which you use one source of
money to pay off the balance owed to multiple debtors. So, for example, you could have
three credit cards with outstanding balances, a student loan, and a personal loan, all
with balances that need to be partially paid out each month. A debt consolidation loan
takes care of all of these debts and rolls them up into a single, more manageable
monthly payment that is often lower than the previous payments you were making combined.
When done right, debt consolidation loans can help clear up your debt and improve your
credit over time.
What are APRs, and How Will a Lower One Help Me?
APR is the single most important factor to consider when comparing
and considering debt
consolidation loans. APR refers to an annual percentage rate, and it's not exactly the
same as interest rates. Here's the main difference:
Interest rate: The percentage you’ll be charged by a lender for supplying you
with a loan
APR: Includes the interest rate AND any fees charged by a lender when taking
out a loan
So, an APR really gives you a broader scope of how much it’ll cost you to take out a
loan. What this means is that the lower the APR you can get, the less you’ll be paying
out over the life of your loan. In short, a lower APR means less money paid out of your
pocket. That’s good news for the borrower.
Reduce Your Total Credit Card Payments by up to 30% to 50%.