Grace Enfield, Content Writer
The advantages of debt consolidation include the possibility of a lower APR, the simplicity of one monthly payment, a lower chance of going into more debt and damaging your credit, and more time for repayment. The pros of debt consolidation outweigh the cons when done correctly.
Advantages of Debt Consolidation
Possibility of a lower APR
You may be able to get a lower APR than the ones on your original debts when you consolidate. This could help you save money and pay off the debt faster.
One monthly payment
Instead of remembering to pay multiple creditors each month, you only have one monthly payment on debts you consolidate.
Lower chance of more debt and credit score damage
Accruing interest more slowly and only submitting one payment per month reduces your chances of missing payments or defaulting, which helps you avoid credit score damage.
More time for repayment
You might get a longer payoff period, depending on the types of debt you consolidate and how you consolidate them. Some personal loans spread the payments out over as many as 144 months (12 years), for example.
Increasing your repayment period might undermine the savings from a lower APR since you will have to keep making payments for a longer period of time and you will accrue interest each month. However, this can be worth it for people who cannot afford larger monthly payments.
If you think debt consolidation is right for you, check out WalletHub's debt consolidation loan comparison page to see the latest offers.
People also ask
Did we answer your question?