There are a variety of different types of loans that can act as consolidation loans. Essentially, any large personal loan that can be used to pay off several smaller ones can be used as a consolidation loan. This could include bank loans, credit union loans, personal installment loans, and more.
Credit card debt can become difficult to manage, especially if you have several cards with high balances. Managing several different payments every month is not easy. Many borrowers turn to consolidation loans in a situation like this. A credit card consolidation loan is one large loan that a borrower takes out in order to pay off several others.
Common types of consolidation loans include traditional bank loans and credit union loans. Unfortunately, a traditional bank loan is usually reserved for borrowers with decent-to-good credit scores. If you have poor credit you may not get approved for one. And a credit union is a membership-based financial institution. You can become a member based on where you live, where you work, or if you have a friend or family member that’s a member. But if you’re not a member you won’t have access to their loans. And if you do, you may still need a decent credit score to be approved.
So where do borrowers with low credit scores turn? A personal installment loan is a popular option for borrowers with less-than-perfect credit scores. These are larger, unsecured personal loans. Because they tend to be larger than payday loans and allow borrowers to repay them over a longer period, they may be good for consolidation. And depending on how much credit card debt you have, you may be able to pay it off using a personal installment loan.
No matter which type of loan you use for consolidation, there are a few things to remember. First, make sure that you’re able to make your payments on time, and that you can repay the consolidation loan by the due date. Racking up late fees or defaulting on your loan will only make matters worse. Also, the goal should be to find a consolidation loan with a lower interest rate than the average interest for all of your smaller debts.