Debt consolidation loans
Combine multiple debts into one loan with one monthly payment and a set payoff date.
When a debt consolidation loan may make sense
A consolidation loan works best when the new loan improves the debt you already have. A lower rate can save money, while one fixed payment can make your debt easier to manage.
| It may fit when | Another option may fit better when |
|---|---|
| You have several debts to combine | You cannot afford the new payment |
| You can qualify for a better rate | The new rate is higher |
| You want one fixed monthly payment | Fees wipe out the savings |
| You want a set payoff date | You need ongoing help managing debt |
Debt consolidation loan facts
Amounts, timing, and terms depend on the lender and your situation.
How a debt consolidation loan works
- 1Add up the debts you want to combine
- Review your balances, interest rates, and monthly payments to see how much you need.
- 2Take out one new loan
- If approved, you get a personal loan large enough to pay off some or all of those debts.
- 3Pay off the old balances
- Use the loan to pay the debts you are combining.
- In most cases, the new lender will do this on your behalf.
- 4Make one monthly payment
- Instead of paying several balances, you make one fixed payment on the new loan each month.
- 5Pay down the loan over time
- Keep making payments until the balance reaches zero.
- A lower rate can reduce interest costs, while a shorter term can help you get out of debt faster.
Other ways to consolidate debt
Common questions
What debts can I combine?+
People often combine credit card balances and other debts. Each lender sets its own rules, so check which debts its loan can pay off.
Will a consolidation loan save me money?+
It might, but compare the total you would repay with what your current debts would cost. Include loan fees. A longer term can lower the monthly payment while raising the total cost.
Can I get a loan with poor credit?+
It depends on the lender and your situation. You may have fewer options or face higher costs. Checking offers does not guarantee approval.
Will checking or applying affect my credit?+
Checking options may use a soft credit check, which does not affect your score. A formal application may involve a hard check, which can affect it. Ask the lender which check it uses.
How soon can my debts be paid off?+
Funding times vary. Your debts are not paid off until each creditor receives and processes its payoff. Keep making payments until you confirm each balance is cleared.
Is a secured loan worth the risk?+
A secured loan uses an asset, such as a car or home, to back the debt. Missing payments could put that asset at risk. Weigh that risk against the loan’s full cost before choosing it.
What if I cannot afford the new payment?+
Do not take on a payment your budget cannot support. Review your spending and ask your creditors about help. A nonprofit credit counselor can help you weigh other debt options.
Get personalized recommendations for your situation.