Debt Consolidation Loans

What Is Debt Consolidation?

Debt consolidation means combining multiple debts into a single loan or payment structure. A debt consolidation loan is typically an installment loan used to pay off existing balances, leaving you with one monthly payment.

Whether consolidation makes sense depends on your rates, fees, term, and discipline around new spending. Consolidation does not eliminate debt by itself.

How Debt Consolidation Loans Work

If you qualify, a lender may disburse funds to pay creditors directly or provide funds for you to pay balances. You then repay the new loan over the agreed term.

Use the debt consolidation calculator to compare estimated current payments with an example consolidated loan—results are illustrative, not guaranteed savings.

Potential Benefits

• One monthly payment instead of several
• Possible lower APR if you qualify for better terms
• Fixed payoff date with an installment structure

Potential Risks

• Total interest may increase if you extend the repayment term
• Fees can offset rate improvements
• Running up balances again can leave you with more total debt

Interest Rates

Rates on consolidation loans depend on credit profile, income, loan amount, and lender policies. Advertised ranges are not guarantees for every applicant.

Credit Considerations

Lenders typically check credit history and may report the new loan to credit bureaus. Impact on your score depends on your overall credit picture and payment behavior.

Read what affects loan approval for factors lenders commonly review.

How to Compare Options

Compare APR, term, fees, and total estimated interest—not just a lower monthly payment. A longer term can reduce payments while increasing total cost.