To do this, many or all of the products featured here are from our partners. Ideally, that new debt has a lower interest rate than your existing debt, making payments more manageable or the payoff period shorter.
The option that best suits you depends on your overall debt load, credit score and history, available cash and other aspects of your financial situation, as well as your self-discipline.
For example, if you have both Direct Loans and other types of federal student loans, and you have been making payments toward PSLF on your Direct Loans, you should not consolidate your Direct Loans along with your other loans.
401(k) loans typically are due in five years, unless you lose your job or quit, in which case they’re due in 60 days.A Direct Consolidation Loan allows you to consolidate (combine) multiple federal education loans into one loan. Similarly, if you have Federal Perkins Loans and you are employed in an occupation that would qualify you for Perkins Loan cancellation benefits, you should not include your Perkins Loans when you consolidate.Most will give you an estimated rate without a “hard inquiry” on your credit, unlike many banks and credit unions.For online lenders, the lowest rates go to those with the best credit; rates top out at 36%.One benefit is that this loan won’t show up on your credit report.
But the drawbacks are significant: If you can’t repay, you’ll owe a hefty penalty plus taxes on the unpaid balance, and you may be left struggling with more debt.
» MORE: Pre-qualify on Nerd Wallet and get a personalized rate Pros: Back to top If you’re a homeowner, you can take out a loan or line of credit on the equity in your home.
A home equity loan is a lump sum loan with a fixed interest rate, while a line of credit works like a credit card with a variable interest rate.
» MORE: Nerd Wallet’s best balance transfer credit cards Pros: Back to top You can use an unsecured personal loan from your local bank or credit union or an online lender to consolidate credit card or other types of debt.
The loan should give you a lower interest rate on your debt or help you pay it off faster.
And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free. Our partners cannot pay us to guarantee favorable reviews of their products or services. " At Nerd Wallet, we strive to help you make financial decisions with confidence. Debt consolidation is a strategy to roll multiple old debts into a single new one.