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What Can You Expect from Loan Consolidation?

Sunday, February 16th

What Can You Expect from Loan Consolidation?

If you're like many people today, you may find yourself struggling to pay your bills every month. It can be frustrating - and expensive! - to deal with multiple payments to different lending companies. This is where a loan consolidation company can be very helpful.

What is loan consolidation?

Loan consolidation can be a great solution if you have to make payments on multiple credit cards each month. Simply put, a single consolidated loan is made available to you, which pays off all your other loans. Typically, this type of loan is fixed-rate, which means the interest you pay on the loan is locked in and you pay the same amount each month.

What are the advantages of loan consolidation?

There are many benefits you can realize by working with a loan consolidation company:

  • Lower Interest Rate. The interest rate on your consolidated loan can be much less than the interest rate charged by credit cards. This means more of your payment goes to paying off your loan, which means you'll be loan-free faster.
  • Just one monthly payment. With a consolidated loan, you only have one payment to make each month, rather than managing separate payments to different companies. This greatly simplifies your monthly payments - and if you set up an automatic payment plan, you'll never miss another loan payment again.
  • More money in your pocket. Your single monthly loan consolidation payment is often less than the total amount of all your individual monthly loan payments. Loan consolidation companies can work with your creditors to reduce the amount they receive each month. This means more money in your pocket.
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Pay off all your credit cards

If you're wrestling with the amount of money you owe each month, you need to understand that you have options. A consolidated loan can give you more money each month with a lower monthly payment, save you thousands of dollars over the life of your loans, and eliminate any creditor calls you currently receive.

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Loan Consolidation Company FAQ

Imagine getting enough money to pay off all of your outstanding loans in one fell swoop: that's the essence of loan consolidation. Instead of making multiple payments every month - for your credit card loans, student loans, and so on - you pay them off with a bigger loan at a lower interest rate. Now, you have one monthly payment to make instead of several.
If you have more than one loan, especially with high interest rates, loan consolidation is definitely worth looking into. It can also be one of several strategies you use to avoid bankruptcy, by simplifying your budget and helping you get on top of your finances.
In some cases, yes. There are counseling services that work with consumers like you, to evaluate your financial situation and determine the best course of action; their recommendations may or may not include taking out a loan to consolidate your loans. A new loan makes sense if your existing loans have high interest rates or if you're having a difficult time keeping track of your payment due dates and being on time.
Yes, and only you can decide which approach is right for you. Some people borrow money from friends or family to pay down loans. Others try to negotiate with the lenders to lower interest rates, or to get a deferment or forbearance put in place during times of economic downturns. There's also the possibility of working a side hustle to make extra money. But, when those attempts fail, what then? Loan consolidation provides a hassle-free alternative that makes good financial sense for many consumers.
If you use it wisely, it should. Having all of your loans consolidated into a single payment will reduce your credit utilization, and it'll make it more likely that you don't have missing or late payments. Both of these things will raise your credit score.
It varies. For loan consolidation that happens with a new personal loan, you can expect to pay interest, as well as origination fees of 1-6% of the total loan amount. If you're taking advantage of financial counseling services that offer loan consolidation, they may come free of charge. A few counseling providers charge for their programs; be sure you know exactly what you're getting before you commit to a loan consolidation plan.
If you opt for counseling services only, chances are good that you'll get them at no cost. Some providers may charge a fee for specific services, and in that case you may be able to get your money back if you don't feel that the help you got was worth the cost. If you're getting a new loan for consolidation purposes, there's not likely to be a way to reverse it (especially if you've already spent the loan proceeds!).
Absolutely. In fact, consolidation is one of the top purposes listed by Americans taking out a personal loan! It can be a smart way to reduce your interest payments, make it more likely that you'll be on time, and get back on track financially. But, it's up to you to use the consolidation loan wisely: to pay off all of your smaller loans with the funds you get, and not spend it on unnecessary things! Also, as you choose a resource to use for your loan consolidation, be sure to check out the provider's reputation with the Better Business Bureau and any other client feedback. That will give you the peace of mind that comes from knowing you've made a good choice for your financial future.
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