Learn More About Debt Consolidation Loans | CCCS of Chattanooga
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A debt consolidation loan is a personal loan offered by banks and financial institutions. It allows the borrower to move several loans from different lenders into one installment loan at a single financial institution. Installment loans have fixed payback periods and fixed payment amounts. Interest accrues at a fixed annual percentage rate (APR). Once the debt consolidation loan is active, the original debts are paid in full and the new installment loan takes their place.

Why people consider debt consolidation loans

  • Lower fixed annual percentage rate (APR)
  • Longer payback period and fixed payment amounts
  • Lower monthly payments
  • Fewer bills to pay

Disadvantages to debt consolidation loans

  • You must qualify for credit and be approved by the lending institution.
  • Your credit score is a good indicator of the interest rate you will receive. If you have a low credit score, you'll be offered a high rate of interest. Ask your lender for an interest rate estimate before applying.
  • A longer payback period could mean that you will pay more in interest over the life of the loan.
  • Lenders can leave your old accounts open, even after the balances are paid to zero with funds from the debt consolidation loan. Over the last 25 years at CCCS of Chattanooga, we've seen many families get into trouble by running up the old credit lines again while paying down the debt consolidation loan. Responsible use of credit is imperative when selecting this method of debt consolidation.

As an alternative to debt consolidation loans, CCCS of Chattanooga offers debt management programs.

Our programs do not include debt consolidation loans or require up-front fees for debt settlement services. Instead, we provide you with practical budget counseling and work with you and your creditors to build a budget you can live with. Then, we manage the repayment of your debt. You make one monthly payment to us and we distribute the money to your creditors.

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