Consolidating personal loans

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“If you’re not absolutely positive that you can pay off your debt in that time frame or if you think you might struggle with building up your debt on credit cards once again, I think getting a new credit card is probably not a good idea,” said Germano.

There are also a variety of private lenders that will allow you to consolidate either private or federal student loans.

By using debt consolidation loans, you can save considerably — sometimes up to 40 percent of the total debt.

That makes sense for a lot of people.” She added: “But some people would rather tackle a debt management plan themselves.

If you know that wouldn’t be overwhelming to you, that makes a lot of sense.

Because all your outstanding debts are paid in full, this method can be beneficial to your credit score.

“Consolidation in this sense can be viewed as very positive,” said Griffin, of Experian.

While consolidating debt certainly has merits, it is not the right choice for every individual.Then you can focus on repaying that personal loan, which requires just one monthly payment and, ideally, has a lower interest rate than what you were paying across multiple debts (it may not have a lower rate, but it’s in your best interest to find the lowest one you can).The specifics of how debt consolidation works will vary by the type of debt you have and the method you choose.Debt consolidation can take many forms, including a personal loan, a balance-transfer credit card, a home equity line of credit (HELOC) and a debt management plan, among others.(We’ll get into the details of those options later on.) No matter what strategy suits you best, the idea is the same: Lump together all or most of your debts into a single payment as a way to save money, simplify your finances … For example, if you have multiple high-interest credit card debts and outstanding medical bills, you may want to take out a personal loan to repay those debts.

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