Loan consolidation can save you money in the long run if you can obtain a lower interest rate than the average of your existing loans. But the loan you choose and the method by which you consolidate your debt will influence how much you can save.
A loan consolidation interest rates, whether a personal or student loan, pays off your multiple outstanding debts and provides you with one monthly payment. It reduces the number of creditor payments and associated due dates, which may help you avoid missing any payments, which can ding your credit score.
The amount you pay in principal and interest depends on the loan size, your ability to qualify and other factors, such as your creditworthiness and your willingness to put up collateral. But public information available on lenders’ websites can give you a general idea of the loan rates and terms you could expect to receive when you apply for a loan consolidation.
Smart Borrowing: Navigating the Landscape of Loan Consolidation Interest Rates for Financial Success
Generally, your credit score and your willingness to provide collateral are the two most important factors in qualifying for a debt consolidation loan. If you have a high credit score and are willing to use your home or car as collateral, you can often get better loan rates than those available for people with low credit scores who are not willing to offer collateral.
You can find several online resources that allow you to calculate your credit score for free. This score, which is based on the information in your credit report, will indicate where you fall in the excellent, good, fair or poor categories that lenders use to evaluate your risk as a borrower.
