You then make one “consolidated” payment to the debt settlement company each month, and in turn the company makes payments to each of your creditors on your behalf.
Once an account is included in this type of program, the creditor will close the account.
If you have never used student loans before, there are many different aspects of these lending tools that may seem confusing.
Here are answers to some of the most common issues surrounding student loans and how they work.
Even one late payment will have a negative impact on your credit scores.
Before entering into any debt consolidation plan, research the offer to make sure that the company is reputable and that you fully understand the terms and implications of the program.
The first is the kind you describe, where you apply for a personal loan, preferably one with a relatively low interest rate, and then use the money from that loan to pay off all your credit card balances at once.
After making an adjustment for inflation, college students are borrowing roughly twice as much as they borrowed 10 years ago. It shows that there is a big demand for these relatively low interest loans and easy approval methods.
The cost of a secondary education has increased substantially in recent years and it’s not showing any signs of slowing down any time soon.
While the costs have gone up, the importance of getting a college degree is still there.
Since the interest rate on a personal loan is often considerably lower than on a credit card, and the repayment term potentially much longer, the consolidated payment may be much lower, as you indicated.
If you are struggling to keep up with your monthly payments, consolidating your debt in this way can certainly help alleviate financial stress.