How to Apply for a Debt Consolidation Loan

Debt consolidation loans are a great way to reduce the amount of interest you pay on your debt and make it easier to manage your payments. They allow you to transfer multiple high-interest credit balances to a single account, ideally with a lower annual percentage rate (APR). Taking the time to compare various loan offers can help ensure you're getting the lowest rate on a debt consolidation loan. Before applying for a debt consolidation loan, it's important to make a list of all the debt accounts you plan to consolidate. This includes the amount you owe, the interest rate, and the minimum monthly payment.

Once you have this information, add them all up to find out how much of the loan you'll need to consolidate the balances. When you're ready to apply for a debt consolidation loan, follow these five steps:

• Check your rates.
• File your application and get a quick credit decision, usually the same day.
• Compare offers from at least three lenders that offer debt consolidation loans.
• Use the loan funds to pay your creditors as soon as possible.
• Manage your loan responsibly.

If you can wait to apply for a consolidation loan until your credit score is better, it's almost always a better option. It's also important to use a debt consolidation loan calculator to play with the numbers and see how much the options might cost you. Not all debt consolidation loans require a credit score higher than 660, but you're unlikely to get worthwhile rates for consolidation with a lower rating. Once you apply, it may only take a week or two before your debt is consolidated and you make payments to your new lender. In many cases, your debt consolidation lender can act as an intermediary between you and your current creditors.

When the funds from your debt consolidation loan are in your account, you'll pay your creditors directly.