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This amounts to a total savings of ,371.51 (,750 for payments and ,621.51 in interest).
Of course, borrowers must have the income and creditworthiness necessary to qualify with a new lender, which can offer them at a lower rate.
Although each lender will probably require different documentation depending on your credit history, the most commonly required pieces of information include a letter of employment, two months' worth of statements for each credit card or loan you wish to pay off, and letters from creditors or repayment agencies.
If you have a good payment history with a bank, credit union or credit card company, asking that institution about a debt consolidation loan should be your first step.
Favorable payoff terms include a lower interest rate, lower monthly payment or both.
There are several ways consumers can lump debts into a single payment.
You usually work with a debt-relief organization or credit-counseling service.Debt consolidation means taking out a new loan to pay off a number of liabilities and consumer debts, generally unsecured ones.In effect, multiple debts are combined into a single, larger piece of debt, usually with more favorable payoff terms.Theoretically, debt consolidation is any use of one form of financing to pay off other debts.However, there are specific instruments called debt consolidation loans, offered by creditors as part of a payment plan to borrowers who have difficulty in managing the number or size of their outstanding debts.