Your Top 5 Questions About
Debt Consolidation, Answered
Here are some important topics to address before applying for a personal loan to reduce your debt.
It's easy to get overwhelmed when the bills arrive faster than you can pay them off. If you currently feel bogged down by debt, there are solutions that could both simplify your life and help you achieve a brighter financial future so that you can focus on the things that really matter to you.
For many, debt consolidation is one such solution. Here are answers to five common questions that can help you decide if this approach to reducing debt is right for you.
1. What exactly is debt consolidation?
Debt consolidation allows you to combine multiple unsecured debts into a single payment. Rolling multiple higher-rate debts, like credit cards,1 into a set regular monthly payment could help you better manage your bills and possibly save hundreds, even thousands of dollars on interest.
If you apply for a Discover personal loan to be used for debt consolidation, up to $40,000 can be sent by the next business day if you’re approved for and accept the loan.2 What’s more, with Discover® Personal Loans you choose where the money goes. You can send money straight to many creditors or to your bank account.
Questions? Discover Personal Loans has 100% U.S.-based customer service, so you can connect with a loan expert today and start taking positive steps toward reducing debt.
2. Why should I consider a personal loan to consolidate my debt?
You’ve probably gotten offers from credit card companies to transfer balances for which you’re paying a high interest rate to a new card with lower—or no—interest. While this may sound enticing, the reality is that after the promotional period, the interest rate will increase, often significantly.
A Discover personal loan has a fixed rate, so your set regular monthly payments stay the same over the life of the loan. What’s more, there are no fees of any kind if you pay on time.
If you’re interested in knowing what your rate and monthly payment will be, Discover Personal Loans allows you to check it with no impact to your credit score.3 Once you have that information in hand, it’s easy to know with confidence if using a personal loan for debt consolidation is the right decision for you.
3. What are some types of debt that I can use a personal loan to consolidate?
If you’re looking to pay off higher-rate loans, auto repair expenses, or medical bills, using a personal loan to consolidate debt could be a great option. The loan can also be used to reduce debt from pet emergencies, financial emergencies, moving costs, and home repairs.
Always check with the lender when applying to see if they allow other debts to be consolidated.
Reasons to Consider
Consolidating Debt
REASON 1: You could combine multiple
debts into a single payment.
This way you could alleviate any stress tied to keeping track of various due dates and maybe missing a payment.
XREASON 2: Discover Personal Loans allows you to choose a repayment term that works with your budget.
A longer term allows you to have a lower monthly payment, but you can also choose to pay off the loan more quickly with a shorter term. Whichever you prefer, a Discover personal loan could help you feel more confident about hitting your monthly payment goals and sustaining positive financial momentum.
XREASON 3: You could save money.
By using a Discover personal loan to pay off higher-rate debt, you could save hundreds, or even thousands, in interest payments over time. So, you can get excited to feel less stressed and more optimistic about what lies ahead!
X4. How much can I borrow, and what types of fees are involved?
Loan amounts vary by different lenders and how much you qualify for depends on your personal finances. Some lenders charge an origination fee,4 which is a percentage of the loan amount deducted before you receive the loan. For instance, if a $20,000 personal loan includes a 5% origination fee, the lender would subtract $1,000 up front and you’d receive $19,000. And you are still responsible for repaying the full $20,000, along with interest, on the full amount.
With Discover Personal Loans, there’s no origination fee, so you can rest assured that the loan amount you apply for is the amount you’ll receive. In fact, there are no fees of any kind as long as you pay on time. It’s reassuring to know that there’s a potential loan solution for you, no matter what your current circumstances.
5. Is a debt consolidation loan a good idea?
Consolidating your debt into a personal loan provides a number of benefits. Most notably, you’ll have fewer bills to juggle, which could help reduce stress and put you on a faster track to paying off your debt; you’ll get a fixed repayment schedule, providing consistency; and, depending on what interest rate you qualify for, you may be able to save hundreds, or even thousands of dollars in interest over the life of the loan.
To see how much you could save when you consolidate higher-rate debt with a Discover personal loan, check out the debt consolidation calculator.
Bottom line: A personal loan can be a positive solution for your financial situation. It's a step forward toward paying off debt so you could move on to a brighter future.
1 For debt consolidation, even with a lower interest rate or lower monthly payment, paying debt over a longer period of time may result in the payment of more in interest. A Discover personal loan is intended for personal use and cannot be used to pay for post-secondary education, to pay off a secured loan, or to directly pay off a Discover credit card.
2 If your application is approved, we will send funds after you accept the loan. Your bank or creditor may take more days to process the funds.
3 After you check your rate, if you move forward with an application for a new Discover personal loan, you will need to consent to a hard credit inquiry that will appear on your credit report.
Find out how a Discover® personal loan could help you make progress toward a brighter financial future.
Discover makes loans without regard to race, color, religion, national origin, sex, disability, or familial status.