Learn More About Management Plans A Debt Consolidation Loan (DCL) allows you to make one payment to one lender in place of multiple payments to multiple creditors.A debt consolidation loan should have a fixed interest rate that is lower than what you were paying, which reduce your monthly payments and make it easier to repay the debts.This helps eliminate mistakes that result in penalties like incorrect amount or late payments.There are three major types of debt consolidation: Debt Management Plans, Debt Consolidation Loans and Debt Settlement.
You send one payment to the agency running the DMP and they split it among all your creditors.
— and what the monthly payment and interest rates are on those bills. Once you have this information, make sure to compare lender’s rates, fees and length of time making payments before making a decision.
A consolidation loan should reduce your interest rate, lower your monthly payment, and give you a practical way to eliminate debt.
The best way to consolidate a large amount of credit card debt (anything over ,000) without taking on a new loan, is to enroll in a Debt Management Plan.
Most financial experts agree that a Debt Management Plan (DMP) is the preferred method of debt consolidation.
Be aware, however, that balance transfer cards often charge a transfer fee (usually 3%), and some even have annual fees.