{"id":14874,"date":"2025-05-10T00:54:17","date_gmt":"2025-05-10T00:54:17","guid":{"rendered":"https:\/\/finderica.com\/?p=14874"},"modified":"2025-05-10T00:54:17","modified_gmt":"2025-05-10T00:54:17","slug":"what-to-look-out-for-in-a-debt-consolidation-loan","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=14874","title":{"rendered":"What to Look Out for in a Debt Consolidation Loan"},"content":{"rendered":"
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Loans to consolidate debt can be useful when it comes to getting your personal finances back on track.\u00a0 Debt consolidation loans combine many of your monthly payments into one, which makes them easier to manage. Ideally, you can also get a lower interest rate, helping you save money.\u00a0\u00a0<\/p>\n

With that in mind, here\u2019s what to look for in a debt consolidation loan.\u00a0\u00a0<\/p>\n

Debt Consolidation Loan Types\u00a0<\/h2>\n

Balance Transfer Credit Card Deals \u00a0<\/h3>\n

These are sometimes offered at super low interest rates\u2014some as low as zero percent\u2014for a certain amount of time. You can save a lot of money on interest if you pay off the transferred amount within the window the card agreement allows. However, there can also be transfer fees to consider.\u00a0<\/p>\n

Here\u2019s the thing though, you have to be careful to only transfer as much as you can pay off before the promotional period ends. If you still have a balance when the promotional rate expires, the remaining amount will typically accrue interest at the card\u2019s standard balance transfer APR\u2014which may be high. Additionally, missing a payment may trigger a penalty APR as high as 30%, depending on the card\u2019s terms. That\u2019s why reading the fine print is essential before using a balance transfer for debt consolidation.\u00a0<\/p>\n

Home Equity Loans\u00a0<\/h3>\n

Once you\u2019re approved for one of these loans to consolidate debt, you\u2019ll be allowed to borrow a percentage of the equity you have in your property. Equity is the difference between the fair market value of your property and the amount you owe against it. For example, if the value of your property is $100,000 and you owe $20,000, you\u2019ll have $80,000 in equity.\u00a0\u00a0<\/p>\n

You can then use that money to pay off your debts once the loan is granted. Afterwards, you\u2019ll make a single payment to the home equity lender each month. Interest on home equity loans is usually lower than interest on credit card debt, so you\u2019ll realize considerable savings.\u00a0\u00a0<\/p>\n

The main thing to watch out for here is to be sure you can pay that loan off according to the agreement. You\u2019ll pledge your property as collateral against a home equity loan. This means the lender can force you to sell it to get its money back if you can\u2019t meet the terms of the loan agreement.\u00a0\u00a0<\/p>\n

Debt Consolidation Loans\u00a0<\/h3>\n

Many debt consolidation loans are unsecured, meaning you don\u2019t have to use collateral (like your home) to get them. Qualifying for an unsecured loan may be more difficult, because it\u2019s secured only by your promise to pay.\u00a0 As a result, you\u2019ll likely need a good credit score to get a good deal on a debt consolidation loan. This is important because you\u2019ll need to get the lowest possible interest rate to make the debt consolidation loan make sense.\u00a0\u00a0<\/p>\n

In Summary\u00a0<\/h2>\n

Knowing what to look for in a debt consolidation loan can help you figure out which type is the best solution for your situation. Regardless of the method you consider, you have to do the math so you can be sure the total amount you\u2019ll pay is lower than it would be if you kept paying all of your debts separately.\u00a0\u00a0<\/p>\n

SmartSpending\u2019s personal debt consolidation calculator can help you figure this out. The calculator can also make it easy to compare each debt consolidation option side-by-side, so you can see what your monthly payments might be with each type of consolidation loan.\u00a0<\/p>\n

One more thing to consider: debt consolidation loans don\u2019t erase your debt.\u00a0 They just move it. However, any credit cards you pay off will suddenly have zero balances. This can make it tempting to start racking up more debt on them. But if you don\u2019t manage your spending wisely, you could wind up right back where you were before you did the consolidation.\u00a0\u00a0<\/p>\n<\/div>\n

\n\t\t\t\tContent Disclaimer: <\/span><\/p>\n

The content provided is intended for informational purposes only. Estimates or statements contained within may be based on prior results or from third parties. The views expressed in these materials are those of the author and may not reflect the view of SmartSpending. We make no guarantees that the information contained on this site will be accurate or applicable and results may vary depending on individual situations. Contact a financial and\/or tax professional regarding your specific financial and tax situation. Please visit our terms of service for full terms governing the use this site.<\/p>\n<\/p><\/div>\n

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Loans to consolidate debt can be useful when it comes to getting your personal finances back on track.\u00a0 Debt consolidation loans combine many of your monthly payments into one, which makes them easier to manage. Ideally, you can also get a lower interest rate, helping you save money.\u00a0\u00a0 With that in mind, here\u2019s what to<\/p>\n","protected":false},"author":1,"featured_media":14875,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[221],"tags":[467,367,240],"class_list":{"0":"post-14874","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-debt","8":"tag-consolidation","9":"tag-debt","10":"tag-loan"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/14874","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14874"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/14874\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/14875"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14874"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14874"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14874"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}