Wondering if debt consolidation is right for you? With debt consolidation, all of your applicable debts are rolled into a single loan with a manageable interest rate. Most debts can be consolidated, including credit cards, medical bills, and other unsecured debts. By consolidating debts, you can typically save on interest and get out of debt faster.
How Does a Debt Consolidation Loan Work?
Debt consolidation is just one way to reduce your debt and it can be a very effective way to manage the debt repayment process. To qualify for a debt consolidation loan, you need to have a steady, verifiable income that can support the monthly payment, and you can’t be in bankruptcy or foreclosure. Your interest rate and the loan amount will depend on your credit rating and your debt-to-income ratio. If you have a strong credit score, you will often qualify for a bigger loan, however, those with fair credit can often qualify for smaller loans with higher interest rates.
Other Debt Consolidation Loan Considerations:
- Rates can vary from lender to lender, so compare the terms and payment amounts of different offers.
- Debt consolidation is not an effective option for those whose debts are too high and those who may have underlying financial issues.
- The better your credit is, the more likely it is that you’ll get a larger loan amount with a lower interest rate.
Ready to see how much you could save with debt consolidation?
Calculate your potential loan amount and monthly payment with the TDECU Debt Consolidation calculator. Enter the interest rate and term for the loan you plan to use to consolidate your debts.
Our financial calculators are provided as a free service to our members. The information supplied by these calculators is from various sources based on calculations we believe to be reliable (but are not guaranteed, explicit or implied) regarding their accuracy or applicability to your specific circumstances. All examples are hypothetical and are for illustrative purposes, and are not intended to provide investment advice. TDECU does not accept any liability for loss or damage whatsoever, which may be attributable to the reliance on and use of the calculators. Use of any calculator constitutes acceptance of the terms of this agreement. TDECU recommends you to find a qualified professional for advice with regard to your personal finance issues.