And cons of consolidating debt
Personal loans come with a choice of repayment terms that may range from 3 to 10 years.If you want to pay off your personal loan ahead of schedule, most don’t charge you a prepayment penalty.You may see an initial interest rate when you apply, but a higher rate when you’re quoted.This is because the fee must be included in the annual percentage rate (APR) for the loan you choose.Usually the benefit to you is that you’re given a lower interest rate during an introductory period which can last anywhere from 6 months to 18 months.The key is to read the fine print to make sure you understand what you’re agreeing to before saying “Yes” to a balance transfer.Let’s take a closer look at how it works and at the pros and cons of debt consolidation.: As described above, a basic debt consolidation loan allows you to pay off other debts and replaces those debts with a new debt consolidation loan.
If you want to borrow more, you typically have to apply for a secured loan.
See also: 5 Ways to Get a Loan With Bad Credit You can get a personal loan at most banks, credit unions, and a variety of online lending companies.
The amount you can borrow depends on the lender, your credit, and your income.
One of the most popular peer-to-peer lenders is called Lending Club (you can read a review of it here).
Lending Club is a great option for people with good or above average credit scores.
The new loan, called the “debt consolidation loan” is equal to the amount of all the loans which were consolidated, and its interest rate may be either higher or lower than the rates on those old loans. They’ve muddied the water when it comes to this topic, and the result is that many companies who offer debt settlement or debt management programs call themselves debt consolidation companies.