Loans that are not eligible for consolidation include state or private loans that are not federally guaranteed.
Although all of these different loans may be consolidated, you must have at least one outstanding FFEL or Direct Loan to obtain a Direct Consolidation Loan.
Since the interest rate on a personal loan is often considerably lower than on a credit card, and the repayment term potentially much longer, the consolidated payment may be much lower, as you indicated.
If you are struggling to keep up with your monthly payments, consolidating your debt in this way can certainly help alleviate financial stress.
People often ask us about debt consolidation and whether consolidating their debts will affect their credit.
Whether consolidating your debt is a good idea depends on both your personal financial situation and on the type of debt consolidation being considered.
As you weigh the pros and cons, keep in mind that timing is critical.
With just a few exceptions, you get only one chance to consolidate with the government loan programs.(You can learn more about , which could lead to a lawsuit, the CFPB says.Not paying creditors will also show up as a negative transaction on your credit report that makes it harder to borrow more money.That’s because some may be debt settlement companies that convince you to stop paying your debts and “instead pay into a special account,” the CFPB warns.“The company will then use this money to attempt to negotiate with creditors to reduce the amount of principal you pay off.” If you’re considering this option, try to speak with a nonprofit credit counselor first because debt settlement can put your credit in jeopardy.Consolidation works best as part of a larger plan to become debt-free; it shouldn’t just be a way to buy some breathing room.