Consolidating car and student loans
Then you make one monthly payment into an account held by the counseling agency, and the counselor pays your creditors.
A DMP is not a loan, and Bovee warns that there is "not a lot of wiggle room" in a credit counseling company's plan for you, which typically last up to five years. If you miss one, you could end up back where you started with high interest rates.
This is both stressful and inefficient and raises the risk of missing payments.
If you start missing payments regularly and falling behind, even on one of your loans, your credit score will be damaged.
However, if the signs listed below apply to your loans, consolidating can help you pay off your debts quicker and more efficiently.
Car loans are an ideal type of debt to consolidate.If you're struggling with high interest rates on credit cards and loans while barely making a dent in your debt each month, it may be time to consider debt consolidation.That's a strategy where you roll multiple debts into one monthly payment at a lower interest rate to pay down your debt more quickly.You also have to be careful not to fall back into old habits. Close your newest cards, Bovee says, and be careful with your future credit spending.Keeping up with car payments can be a challenge if you have taken out multiple loans.