The main reason of loan consolidation is borrower’s convenience. Instead of paying too many different lenders or creditors who are charging different rates at different times of the month, you can take out one big loan and pay off all those debt accounts. Then you can make a single payment only once a month.
Before you sign on the dotted line, be sure that the costs of the new, bundled loan will truly be less than what you are already paying different creditors. For many consolidation applicants, their current credit woes mean they would not get the lowest and available interest rate. Plus, when there is nothing to secure your debt; such as your home, expect the lender to bump up the rate.
Calculate interest and all fees on all your existing accounts to determine the total of the payments you now make. Then compare those amounts with the consolidation loan numbers to make sure it truly is a better choice. And, as with any product; shop around. The bank down the street in your Citi may offer attractive rates but a check of your local lenders or some credit union could turn up better terms.