so how does loan consolidation really work??
how do they make ur payments lower??
- 1 decade agoFavorite Answer
First the simplification of a single bill and single payment which reduces the likelyhood of missing a payment and incurring additonaly fees and charges -
secondly is that certain lines of credit have particularly high rates of interest - Payday advances like the Money Tree - for example can charge really high interest rates 10-20 percent a month, thats something like 100-200 percent a year! Your average personal loan should only be about 15-20 percent a year.
Third- Loan consoldation can also tie a medium term loan like a 3 yr car loan into a 30 yr mortage on your house if you have one. Because it's spread out over more time, your monthly payments may be less that way.
It's best to sit down with an adviser to look at the real numbers with you and see if you can not just lower payments, but actually save money too.
- 1 decade ago
by taking the payoffs on all your debts and making one loan. One loan, one APR. You will be saving a lot of money in interest and only making one payment a month which will be lower than the total of all your payments you making each month now.
- JOHN jenLv 41 decade ago
do not be tempted if you cannot afford your payments ask your finance company if they would reduce them it will work out cheaper