Debt consolidation is considered rolling over many debts into one loan with a single monthly payment. This enables you to save money and stay organized, especially if you have accumulated a lot of debt and it seems as if you ran into a dead end. However, not all debt consolidation loans are the same and this guide will provide you with everything you need to know about obtaining one.

How do Debt Consolidation Loans Work?

Debt consolidation loans are considered loans that have fixed rates. Fixed rates mean that the interest will always remain the same and your monthly payment will be predictable. For example, if you have several different credit cards that have different interest rates and minimum payments, a debt consolidation loan could be used to pay off your cards. This would leave you with just one single payment to handle instead of three. These loans can be obtained from companies such as Symple Lending.

There are many ways that a debt consolidation loan can help you save on the cost of interest. Take a look at the examples below:

• Card 1 has a balance of $6,000 with an APR of 20 percent
• Card 2 has a balance of $3,000 and an APR of 25 percent
• Card 3 has a balance of $2,000 with an APR of 16 percent

Paying these balances down in a 12-month period could cost you up to $927 in interest alone. But, if you decide to take out a 12-month personal loan for the amount you owe, which is $11,000, you could pay off the loan in just one year and save up to $500 in interest.

What are the Benefits of a Debt Consolidation Loan?

If you are looking for ways to save money every month and combine your monthly payments, then a debt consolidation loan may be perfect for you. Here are some benefits of taking out a debt consolidation loan:

• Pay off debt faster. You can easily extend the time it takes to pay off your debt just by making the minimum payments on your credit cards. But, with a debt consolidation loan, you can pay off your debt faster because you will be paying more each month.
• Save on interest. Typically, if you are eligible for a lower rate than your current one, you will save on interest. The average credit card interest rate in November 2022 was 19.04 percent. If you compare that to the average personal loan interest rate, which is between 13.5 and 15.5 percent, you will be saving a lot.
• Organized monthly payments. It is a lot easier to deal with one monthly payment than it is to juggle multiple ones that have different due dates. This will reduce your chances of missing payments, which will positively impact your credit.
• Repay on a fixed schedule. Most debt consolidation loans are considered fixed installment loans. This means that you will already know when you can expect to become debt-free. This can motivate you through the entire process.

If you are interested in obtaining a debt consolidation loan, the experts at Symple Lending can help you.