What is a Debt Consolidation Loan?
A debt consolidation loan combines or consolidates your debt into a single loan from a lender. When you’re approved for a consolidation loan, the lender pays off all your debt, then you repay them over time with a set interest rate.
How does a Debt Consolidation Loan work to pay off your debt?
A debt consolidation loan works to pay off your debt through a loan provided by a lender. For example, if you have 3 credit cards and you owe a combined $15,000 on them, a lender could approve a consolidation loan for $15,000. Then, typically, the lender will pay off your existing credit cards with the money they loaned you and close those credit card accounts. After the lender pays off your existing debt, you will make monthly payments to the lender to repay the money you borrowed.
Benefits of a Consolidated Loan
- Single monthly payments
- A lower interest rate, in most cases
- Pay off debt faster
How can Climb Help?
Start your Journey to become debt free and rebuild your credit with Climb.
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