Student loans can take between 10 and 21 years. A mortgage can be good for 25 to 30 years. You may even have to repay your credit card debt over the next 3 years.

Paying the debt is just half the problem. The other is the interest, which, in the long run, can cost you a lot of money. Take, for example, a mortgage with a monthly amortization of $1,500, of which $500 is the interest. Barring any changes in the interest rate, you could be paying $180,000 for interest alone. Wouldn’t it be better then if you can pay your loan as soon as possible to bring the total amortization down?

This is where the concept of debt consolidation loans comes in. Although not everyone can qualify for them, and they’re not meant for everybody, they have a distinct advantage, especially when you want to repay your loans fast.

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How Does It Work?

As its name suggests, debt consolidation is a program that combines all your existing debts into one huge loan. This way, you can:

• Save money by paying off high-interest loans quickly

• Maximize loans that have lower interest rates and better favorable terms

• Focus your financial efforts on only one loan

There are different ways to consolidate your loans. These include the following:

1. Balance Transfers

These work very well with credit cards. Consumer debt is one of the biggest financial issues of US households today. The sooner they get paid, the better. What this basically means is you move your existing credit card balance to another credit card that has a much lower interest rate.

Not all types of credit cards have this feature, and you can’t expect all issuers to say yes to it. Moreover, the issuer may impose restrictions, such as allowing you to do it only once. However, it’s something you can explore.

2. Home Equity Loan

If you have a mortgage, there’s a good chance you’ve already built some equity on your home. Some lenders, including banks, will allow you to take up a loan against the value of your equity. This is a secured loan, which means you give your property as collateral. If you fail to pay your loan (default your payment), the lender can repossess it. But the biggest advantage is since it’s secured, interest rates are also very low and amortization becomes affordable.

3. Personal Loan

If you don’t have a house, it’s still possible to consolidate your debt through a personal loan. One of the biggest benefits is it’s quick to apply and get approved. Moreover, the loan term is short, so you pay less interest. This, though, can also be its problem. You may end up paying big amounts every month.

Which option works for you depends on your situation. If you can’t get a secure loan but you have a good credit score, you can apply for a personal loan and negotiate for better payment terms and interest.

When in doubt on what to do with debt consolidation loans, you can also work with a counselor who can advise you on the best program. Check out our tips at You can also read more tips at
At, we make sure you understand how debt consolidation loans work and give you tips on how they can work best for you.