To apply for a debt consolidation loan, you submit the amount of your existing debts. Upon approval, you combine all those debts into a single new loan. This can save you time and money by lowering the interest rate and monthly payments. By making your outstanding debt easier to manage, you are also in a better position to pay it off in a shorter amount of time.
Most debt consolidation loans come at a fixed interest rate. So, you pay the same amount every month until the loan is paid off. Let’s say you have four credit cards from four different banks, all at varying interest rates. You could use a debt consolidation loan to pay off those cards and have just one loan to manage instead of four. Simple, right? Just be sure the new loan offers a lower interest rate than the average of your current credit card lenders.