A word to the wise, though: Debt consolidation loans aren’t for everyone struggling with debt.
Determining which method will benefit you the most will involve some homework and some calculations … Debt consolidation can take many forms, including a personal loan, a balance-transfer credit card, a home equity line of credit (HELOC) and a debt management plan, among others.
There are also a variety of private lenders that will allow you to consolidate either private or federal student loans.
By using debt consolidation loans, you can save considerably — sometimes up to 40 percent of the total debt.
That makes sense for a lot of people.” She added: “But some people would rather tackle a debt management plan themselves.
If you know that wouldn’t be overwhelming to you, that makes a lot of sense.
Debt consolidation loans can be a great option, not only because it streamlines monthly payments, but also because, in many situations, you may get a reduced interest rate and lower total monthly payment.
Maggie Germano, a certified financial education instructor and financial coach in Washington, D.
“It really depends on the person and the type of debt,” Germano said.
“A debt consolidation loan can help you manage your payments easier and less stressfully.
HELOCs differ from home equity loans in that, instead of receiving a lump sum of cash, borrowers have an agreed-upon amount that they can take from their equity, and access as needed over time. There are two categories: a federal Direct Consolidation Loan and private consolidation or refinancing options.