Debt consolidating loan finance

One benefit is that this loan won’t show up on your credit report.

But the drawbacks are significant: If you can’t repay, you’ll owe a hefty penalty plus taxes on the unpaid balance, and you may be left struggling with more debt.

Nerd Wallet recommends visiting your local credit union first.

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Compare loans for debt consolidation and learn about your options for consolidating debt.

With a debt consolidation loan, a lender issues a single personal loan that you use to pay off other debts, such as balances on high-interest credit cards.

And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free. Ideally, that new debt has a lower interest rate than your existing debt, making payments more manageable or the payoff period shorter.

We believe everyone should be able to make financial decisions with confidence. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. " Debt consolidation is a strategy to roll multiple old debts into a single new one.

» MORE: Nerd Wallet’s best balance transfer credit cards Pros: Back to top You can use an unsecured personal loan from your local bank or credit union or an online lender to consolidate credit card or other types of debt.

The loan may give you a lower interest rate on your debt or help you pay it off faster.

Almost all lenders require you to be 18 years or older and a legal U. resident with a verifiable bank account and not in bankruptcy or foreclosure.

Borrowers with excellent credit and low debt-to-income ratios may qualify for interest rates at the low end of lenders’ ranges.

The maximum annual percentage rate at a federal credit union is 18%.

Online lenders typically let you apply for a debt consolidation loan without affecting your credit score.

Most will give you a rate without a “hard inquiry” on your credit, unlike many banks and credit unions.

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