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Why Debt Consolidation Works: Key Benefits to Know
This guide highlights the key benefits of debt consolidation, including how it can simplify multiple payments, create a more structured plan, and help you better manage your overall financial situation.
Debt consolidation works by combining multiple debts, such as loans or credit balances, into a single, more organized payment plan. Instead of making separate payments to different lenders with different due dates, everything is brought together into one account or structured solution. This means you only need to manage one monthly payment, which helps reduce confusion, improve organization, and make it easier to stay on top of what you owe while working toward paying it down over time.
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Programs from $10,000
How Debt Consolidation Actually Works
You start by applying for a single new loan or debt consolidation solution designed to cover the total amount of your existing debts.
If approved, the funds are either disbursed to you or sent directly to your creditors, depending on the provider's process.
Those funds are then used to pay off your existing debts in full, bringing multiple balances together under one structure.
Instead of managing several bills and due dates, you move to a single monthly payment with your new lender or provider.
Multiple debt payments are combined into one, making it simpler to stay organized and follow a consistent plan to reduce what you owe over time.
How Debt Consolidation Can Help You
One Simple Monthly Payment
Combine multiple debts into a single plan so you only need to manage one monthly payment and due date.
Potential to Reduce Interest Costs
Debt consolidation may help lower overall interest by replacing higher-rate debts with one more manageable option.
Clear and Structured Payoff Timeline
Follow a set schedule so you have a better understanding of when your debt could be fully paid off.
Predictable Monthly Payments
Make one consistent payment each month, helping you plan your budget with more confidence.
Easier Debt Tracking
With fewer accounts to track, it becomes simpler to stay organized and manage your overall finances.
Featured Providers
Who Should Consider Debt Consolidation?
It may be a good option if:
You're managing multiple debts and want a simpler, more organized way to stay on top of them
You prefer making one monthly payment instead of tracking several due dates
You want a clearer and more predictable plan for paying down what you owe
You're focused on getting your finances in order and working toward reducing debt
See how debt consolidation may work for you.
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Choose the right loan for your situation
Different situations call for different options:
If you have less than perfect credit, see options designed for your profile
If you have fair credit (640 to 679), explore lenders that work for you
If you want to estimate your savings, try our debt consolidation calculator
If you're looking by state, see top providers in your state
How to Get a Debt Consolidation Loan
Add up your debts so you know exactly how much you need to consolidate
Check your credit profile so you understand your starting point
Compare providers based on minimum debt, program length, fees, and customer experience
Pre qualify with a soft credit pull to see your options without affecting your score
Apply or enroll with your chosen provider
Receive your plan and start making one simple monthly payment
Add up your debts so you know exactly how much you need to consolidate
Check your credit profile so you understand your starting point
Compare providers based on minimum debt, program length, fees, and customer experience
Pre qualify with a soft credit pull to see your options without affecting your score
Apply or enroll with your chosen provider
Receive your plan and start making one simple monthly payment
Get started with Accredited.
See your options in 60 seconds.
Ready to simplify your debt?
Get started with Accredited
with no impact to your credit.
Frequently Asked Questions
Most providers look at your total debt, income, and overall situation. Many providers work with a wide range of profiles, including borrowers with less than perfect credit.
What is Debt Consolidation?
Debt consolidation is a financial strategy designed for those who are managing multiple unsecured debts. The primary goal is to simplify your financial life by combining those various monthly obligations into a single, more manageable payment.
How Does Consolidation Work?
Debt consolidation is a financial strategy in which you combine multiple high-interest debts into one loan with a single monthly payment. The process typically involves getting a personal loan, using the funds to pay off your existing debts like credit cards or medical bills, and then repaying the new loan over a set period. As a result, you’ll have just one manageable monthly bill instead of many.
Representative Example
For a $20,000 personal loan with a 48-month repayment term and a 6.99% APR (which may include an origination fee), your required monthly payment could be around $479. Over the life of the loan, the total amount paid back would be approximately $22,981. The APR for your loan may be higher or lower, as the actual rate depends on your financial profile, loan term, and other factors.
Typical Loan
Debt consolidation loans can accommodate a wide range of financial needs. Repayment periods are generally structured from 2 to 5 years (24-60 months). Your specific monthly payment is determined by the total amount of your enrolled debt and the repayment term you choose.