Servicing multiple payments can be hard to manage, but a consolidation loan — combining all your debt into one loan with one payment — can help you streamline your budget. Consider applying for a consolidation loan if you’ve rarely missed a payment, as your credit is likely still good. Apply at major banking institutions as they will offer much lower interest rates than second-tier and third-tier institutions. Be careful you’re not simply swapping multiple high-interest rate loans for one combined loan with the same high rate!
Understanding the cost of borrowing (the amount of money you will pay in interest over the term of the loan) as well as the term of the loan (the length of time it will take to repay the loan) is key to understanding whether a debt consolidation loan will work for you. Just looking at the monthly payment will only tell you part of the story. It’s also important to look at how long it will take to pay off the loan. A monthly payment of $300 sounds reasonable until you find out it will take you 10 years to pay off your loan!