If you’re trying to get out of debt and you owe a number of creditors, it may be a good idea to consider a debt consolidation loan. Debt consolidation loans can help you get out of debt faster, and they may also help you reduce the total amount of money that you owe thanks to lowering your interest rate.
The Benefits of Debt Consolidation Loans
Many people who have a large amount of debt owe several different creditors. In addition to owing money to a variety of credit card companies, people may also have medical bills or be paying off a car loan. A debt consolidation loan allows you to pay off everything you owe in one fell swoop; however, you’ll still owe approximately the same amount of money; it will just be to a single lender.
Getting a debt consolidation loan can make it easier to keep track of your debt since you’ll only have to make one payment each month. Additionally, if you’re able to obtain a lower interest rate or often run into late fees, you can reduce the total amount of debt that is added to what you owe, reducing what you need to pay to get out of debt.
What Affects Interest Rates
When you’re looking for a debt consolidation loan, the loans that are available to you will depend on the same factors that are associated with applying for regular loans. These factors include your credit rating, how much you want to borrow and your ability to pay the loan back. You are likely to obtain lower interest rates and better loan terms if you have good credit and/or put down collateral.
Debt Consolidation Loan Calculators
There are a number of online calculators that can help you figure out if a loan is right for you as well as what your monthly payments will be and how long it will take to pay it off. These calculators can also help you determine if a consolidation loan will help reduce the amount of time it will take to pay off your loan and by how much as well as if a loan can reduce what you will end up paying to get out of debt.
This calculator allows you to input a variety of data to determine how long you’ll need to pay off a loan and what the total costs of the loan will be including fees and interest rates. You are able to include things like your credit card debt, the loan origination fee, the interest rate and closing costs. The loan calculator also allows you to factor in debts other than credit cards, including multiple car loans and student loans.
The AARP calculator allows you to input a number of data points to help you see how different debt amounts, interest rates and loan terms will affect what it will take and how long it will take to get out of debt with a debt consolidation loan. This calculator also shows you, using a bar graph, the difference in what your monthly payments will be with and without debt consolidation.
If you’re looking for quick and dirty information about how a loan may work for you, the Lending Tree calculator is a good choice. You just need to put in some basic information, which is your loan amount, the interest rate and the loan term, and the calculator will provide an estimate of your monthly payments.