Many companies will reach out and offer consolidation opportunities as a easy fix for your debt problem.Although a consolidation loan may make it easier to manage your debt because you just have one payment to worry about, it does not really address the issues that got you into debt in the first place.Federal student loan borrowers have the option of consolidating their loans via the Direct Consolidation Loan program offered by the U. That loan is then serviced by the servicer of your choosing – of which Nelnet is one!
Consolidating debt with a loan could reduce your monthly payments and provide near term relief, but a lengthier term could mean paying more in total interest.
When people mention debt consolidation, they are usually referring to one of two different methods.
Often the larger loan has a lower interest rate than the smaller loans.
Additionally, the term on the loan is often longer which will lower the amount the consumer needs to pay each month.
It is important to choose the right consolidation loan for your situation.
One type of consolidation loan is a student consolidation loan.
It can also make it less likely that you will fall behind on your payments and risk harming your credit.
For these reasons, taking out a personal loan to consolidate higher interest debt can often be very beneficial.
Consolidating debt is when you take out a single, new loan to pay off several existing debts.
This can be a good way of taking control of your finances but you need to be careful.
Since the interest rate on a personal loan is often considerably lower than on a credit card, and the repayment term potentially much longer, the consolidated payment may be much lower, as you indicated.