Ask Terry Questions Consolidation loan

Consolidation loan

By Terry Savage on October 02, 2017 | Credit/Debt

Is it a good idea to take out a loan to pay off credit cards and students loans so that I would only have one payment per month? Thank you for your help.

Terry Says

I don't know what kind of "loan" you would be considering.  Most banks won't make personal loans for debt consolidation.  If you find a lender, be sure to check the fine print.  Likely, the initial interest rate will be low, but will float higher within a short period of time. The one exception to that would be the possibility of refinancing PRIVATE student loans at a lower rate.  (You'll want to keep the federal student loans, because they have some helpful provisions if you can't pay.)  Contact to learn about private student loan refinancing.  But you must have a good job and good credit to do that.  Your letter implies you also have credit card debt, so you may not qualify to refinance private student loans. It would be better to think about earning more money, spending less -- and applying the difference to pay down the loan balances asap!



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