Is consolidating loans a good idea
As you weigh the pros and cons, keep in mind that timing is critical.
With just a few exceptions, you get only one chance to consolidate with the government loan programs.
, into one single bill that’s paid off with a loan.
There are dozens of ways to do this, and some include transferring debt to a zero or low-interest credit card, taking out a debt consolidation loan, applying for a home equity loan or paying back your debt through a debt repayment plan.
When researching loan consolidation options, you may come across what’s known as debt consolidation companies.
Some of these are legitimate, according to the Consumer Financial Protection Bureau, however, others are incredibly risky.
WARNING: It is very dangerous to consolidate federal loans into a private consolidation loan.
Although all of these different loans may be consolidated, you must have at least one outstanding FFEL or Direct Loan to obtain a Direct Consolidation Loan.
(You can learn more about , which could lead to a lawsuit, the CFPB says.
Not paying creditors will also show up as a negative transaction on your credit report that makes it harder to borrow more money.
The first is the kind you describe, where you apply for a personal loan, preferably one with a relatively low interest rate, and then use the money from that loan to pay off all your credit card balances at once.
Once all of your other accounts are paid in full, there is only one payment to make every month – the one to the new lender.