Debt Guide: Consolidate Loan Debt

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• Is this the right option for you:
  this may be an ideal option if your total credit card and other loan debt is significant and if you need a consolidation program with payoff terms of 3 years or more.
  
  This option is ideal for those who need to consolidate their loan debt into one, low repayment plan.
  
  By consolidating your debt under repayment terms of 3 or more years, you basically lower your monthly payment by extending your repayment period.
  
  
  
• Avoid consolidating low-interest rate loans:
  you should consolidate only those loans under a repayment plan that offers an interest rate that is lower than the weighted interest rate charges on your existing loans.
  
  This gives you the benefit of paying off loans without paying too much interest.
  
  Estimate your weighted interest rate:

	1.	a: enter each loan balance that you want to consolidate b: enter your loan debt interest rate c: press calculate. calculate will multiply the balance by its current interest rate to give you a weighted factor for each loan:
		Loan Amt	Interest Rate	Weighted Factor
		X	% =
		X	% =
		X	% =
		X	% =
		X	% =
		X	% =
		X	% =
		X	% =
	2.	Sum the factors together to get a weighted average:
	3.	Sum the outstanding balance of all loans:
	4.	Divide the weighted average by the loan balance.		%
		The interest rate on your consolidation loan should be lower than this "weighted interest rate" to benefit from an overall lower consolidation interest rate.
	5.	You can remove low-interest rates loans from your list and pay them off separately. Then calculate your weighted average to consolidate your remaining loans.

• Calculate amount to consolidate:
  link to our Debt Consolidation Worksheet and list each credit card that has a debt balance. Insert the balance amount with its respective interest rate (APR). Hit "Calculate" to total your numbers.
  
  
  
• Set repayment plan:
  use the debt consolidation worksheet to calculate your monthly payment
  
  Note that your payoff term will be anywhere from 5- to 7-to 10-years or more.
  
  Calculate your estimated monthly payment; note the monthly savings you can anticipate by consolidating your debt under extended repayment terms.
  
  Run different repayment scenarios to design a payoff plan that works for your.
  
  
  
• Use your monthly savings to payoff your debt fast:
  The advantage of consolidation is that you can extend the repayment period to reduce your monthly pay outs. The disadvantage is that over time, you will pay out more interest by extending your repayment plan.
  
  However, if your budget allows, you can use the monthly consolidation savings to payoff your consolidation loan faster.
  
  For example: let's assume that you had the following loans that will take you 5 years to payoff (considering the current repayment plans)
  
  If you consolidated the following loans under a consolidation rate of 7.00% with a 10-year repayment plan, you would save around $392 each month over current payments.
  
  These savings can be applied as an extra amount each month to pay down your consolidation loan within 4 years — 1 year earlier if you didn't consolidate your debts.
  
  

  Current Outstanding Loans
  	Balance	Payment	Rate
  Loan1	$800	$32	12.5%
  Loan2	$1200	$40	12.5%
  Loan3	$2777	$67	12.5%
  Loan4	$8530	$175	8.00%
  Loan5	$18997	$453	6.75%
  Total	$32,304	$767
  Payoff	60 months
  Consolidation Loan: 10-yr Repayment Term
  	Balance	Payment	Rate
  Total	$32,304	$375.08	7.00%
  Savings		$392.00	($767-$375)
  Payoff Amounts
  Current		$375.08	(payment)
  Extra1		$392.00	(savings)
  Total		$767.08	(monthly payment)
  Payoff	around 48 months

  
  
  
• Consolidation allows for budgeting:
  the reason for consolidation is to save (in the example above) $392.00 in monthly payments. This allows you to use the extra saving to budget for other living expenses.
  
  But is your budget allows you to apply the $392.00 savings toward paying down your consolidation loan, you have the flexibility to do so in those periods where your budget allows.
  
  We invite you to visit our Lower Your Bills section to find additional savings that can be applied to paying off your debts.
  
  
  
• Loan Consolidation Options:

  1) If You Own a Home:
  by using the security of your home, you can secure a home equity or home refinancing loan at low rates with repayment terms of 5 or more years. You can use this loan to consolidate your credit card and other loan debt.
  
  This option allows you to setup a repayment plan with extended terms that can significantly reduce your monthly payment (depending on the amount being consolidated).
  
  You can also pay extra each month to quickly payoff your consolidation loan.
  
  Get up to four national lenders to review a consolidation option that fits your budget. Select the option that works for you. No obligation.
  
  no obligation debt consolidation loan
  
  
  
  2) For those who don't own a home:
  this deb reduction option is available for debt holders who don't have a home or who don't have enough equity in their home to consolidate. Debt professionals will tailor a debt reduction plan that works for you.
  
  This option allows you to setup a repayment plan with extended terms that can significantly reduce your monthly payment (depending on the amount being consolidated).
  
  no obligation debt reduction request form