While you may face tens of thousands of dollars of debt like the average American, you can take the reins of your debt with a consolidation loan. Debt consolidation puts your existing loans into a new, single loan, often with a better interest rate. This product can help you implement a more aggressive debt repayment strategy and decrease how much interest you pay over the life of the loan. Here are the details and how to tell if debt consolidation is right for you.
Debt consolidation can be a powerful tool for simplifying your finances and saving money on interest payments. Quicken Loans offers various debt consolidation options to help you take control of your debt. In this article, we’ll explore what debt consolidation is, how it works, the different methods offered by Quicken Loans, and who can benefit from consolidating debt.
What is Debt Consolidation?
Debt consolidation simply means combining multiple debts into one new loan. The goal is to simplify repayment by having a single monthly payment at a lower interest rate. Common debts that people consolidate include:
- Credit cards
- Personal loans
- Auto loans
- Medical debt
- Payday loans
Consolidating these debts into one new loan through Quicken Loans can make repayment more manageable. You’ll write one payment each month to Quicken Loans instead of keeping track of payments to multiple creditors.
How Does Debt Consolidation Work?
The debt consolidation process includes a few key steps:
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You choose the debts you want to consolidate and apply for a consolidation loan with Quicken Loans.
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If approved, Quicken Loans pays off your old debts directly
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You begin repaying the new consolidation loan to Quicken Loans with fixed monthly payments.
It’s that simple! Combining everything into one loan can reduce the burden of juggling multiple payments and deadlines each month.
Quicken Loans Debt Consolidation Options
Quicken Loans offers various loan products that can be used to consolidate debt The main options include
Personal Loans
An unsecured personal loan is a popular choice for consolidating high-interest credit card balances. Personal loan rates are often much lower than credit card rates.
Home Equity Loans
If you have equity built up in your home, a home equity loan uses your home as collateral while letting you consolidate debt at low interest rates
Cash-out Refinance
With a cash-out mortgage refinance, you can tap equity to pay off debts while potentially lowering your mortgage rate at the same time.
Student Loan Refinancing
For those with multiple student loans, refinancing them together may help you secure a lower overall interest rate on your remaining student debt.
Quicken Loans has experts who can guide you through all of these debt consolidation options to find the right fit based on your financial situation.
Who is a Good Candidate for Debt Consolidation?
Here are a few signs that debt consolidation may be a smart financial move for you:
- You have high-interest debts like credit cards or payday loans
- You struggle to keep track of multiple monthly payments
- You have good credit and income to qualify for a consolidation loan
- You can get a lower interest rate by consolidating debts
- You need help staying organized with bill pay
Consolidating can provide a single payment, lower rate, and easy tracking. But it still means you are paying off the debt, just in a simplified way. Debt consolidation works best for those committed to becoming debt-free.
The Pros and Cons of Debt Consolidation
As with any financial product, debt consolidation comes with both advantages and potential disadvantages. Consider these pros and cons when deciding if it’s right for you.
Pros:
- Simplifies finances with one payment
- May lower monthly payment
- Can reduce overall interest paid
- Makes budgeting easier
- Helps improve credit through on-time payments
Cons:
- Loan origination fees
- Temporary credit score drop from new inquiry
- Potential for higher rate on new loan
- Doesn’t erase debt, still must be paid off
Is Quicken Loans the Right Lender for Debt Consolidation?
There are many reasons to choose Quicken Loans for your debt consolidation needs:
- Online process: Apply and track your loan anytime in your Quicken Loans account
- Fast funding: Get approved borrowers their funds fast
- Rate match: Quicken Loans will match or beat a competitor’s rate
- Award-winning service: Highest customer satisfaction in multiple surveys
- No origination fees: No tricky fees to worry about
Quicken Loans makes the debt consolidation process smooth and convenient so you can focus on paying down debt.
Consolidate Your Debt and Take Control of Your Finances
If debt repayment has become a confusing or stressful situation, consolidating with Quicken Loans can help simplify your finances. Reduce stress by making one monthly payment at a competitive rate. Take control of your debt and put yourself in a position to pay it off faster. Contact Quicken Loans today to learn more about debt consolidation options.
Credit Card Balance Transfer
A balance transfer moves debt from one account to another. This type of debt consolidation is typically only used for credit card debt. A balance transfer is advantageous when you obtain a new credit card with a 0% introductory annual percentage rate (APR). This way, you can transfer a balance from a credit card with an APR of 20% or more to a card that doesnât charge interest for a guaranteed period (usually 6 â 12 months). Instead, youâll pay a one-time transfer charge that typically ranges from 3% â 5% of the balance.
For example, say you transfer a $10,000 credit card balance from an account with an APR of 18% to a card with a 0% APR. You pay a $500 transfer fee and halt the interest charges of about $150 per month. Therefore, the transfer fee is worth the interest savings.
A home equity loan allows you to tap into your home equity to consolidate your debt. Lenders typically allow you to borrow around 85% of the equity in your home with a home equity loan. Youâll receive a lump sum, which you pay off with a fixed interest rate based on a fixed payment schedule. Because a home equity loan is a second mortgage, youâll put your home up as collateral for a home equity loan.
Home equity loans provide low interest rates because of the collateral required. As a result, they are suitable for debt consolidation if youâre looking to reduce your monthly payment and save money over the long haul. Remember, you can use a home equity loan with a primary or secondary home.
What Is Debt Consolidation?
Debt consolidation means taking out one loan to pay off your other debts. For example, you might consolidate student loans, credit card debt and an auto loan into one new loan. Doing so allows borrowers to roll multiple debts into one loan with a single monthly payment. Ideally, consolidation loans provide a lower interest rate and payment amount. As a result, debt consolidation is a viable strategy for getting out of debt.
Quicken Loans Debt Consolidation Review: Pros and Cons
FAQ
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