You usually can qualify for a lower interest rate from many banks if you can deduct payments from an account you have with them.If you’re a college student or recent graduate, then you’ve probably thought more about student loans and how to pay them off than you’d like.A secured loan occurs when a valuable asset, such as a house or a car, serves as collateral in case you, the debtor, stop making payments (known as default).If default occurs, then the company that loaned the money can legally repossess your house or car.By definition, consolidation means combining many loans into one single loan.After consolidating, you have only one interest rate and make only one monthly payment, instead of having multiple rates and payments.While consolidating student loans is not the right choice for everyone, it can be a real help to some.
Because of the collateral, companies are willing to offer lower interest rates with a secured loan.
Another kind of debt consolidation is a balance transfer, where consumers pay off multiple credit cards by taking out a large balance on a new credit card at a favorable interest rate.
However, the fees for this are expensive, and few people can actually pay off the new debt before the finance charges jump back up to a high amount.
Community Q&A If you've watched TV or opened your mail lately, you know that there are plenty of companies eager to help you consolidate your loans to "cut your payments in half," "lower your interest rates," and "help you get out of debt fast." Indeed, consolidating your high-interest loans and credit card debt into a single loan with a lower interest rate and more manageable payments makes perfect sense. Many people who consolidate loans end up paying more than they would have otherwise.
In the case of home-equity loans, in fact, an alarming number of borrowers end up losing their homes.