Can You Combine Loans Into a Single Payment? (Yes, Here's How)

DEBT HELP - DEBT RELIEF
Debt consolidation can help you pay off debt faster or ease your monthly burden by lowering your payments. Figure out if debt consolidation is right for you.
Updated Feb. 8, 2024
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Just asking whether you can combine your loans into a single payment is an amazing start to getting on the right financial track and figuring out how to pay off debt.

And put simply, yes, you can combine the total amount of multiple loans into one single loan, called a consolidation loan. Having just a single monthly payment to worry about can make all the difference in your budget, and you might be able to save money by securing a lower interest rate.

If you think this might make sense for you, read on to learn how to get started (and what to avoid) and how to choose the best debt consolidation companies.

In this article

Key takeaways

  • A debt consolidation loan combines multiple loans and debts into one loan. For example, it could pay off several credit cards, and you would then repay one loan. 
  • Get quotes from multiple debt consolidation companies to find the best rate and terms.  

What is debt consolidation?

When you're struggling with debt and not sure where to turn, it might be time to consider debt consolidation. Debt consolidation combines multiple loans into one bigger loan amount from a single lender. That big loan pays off all your individual loans, so you just have one monthly payment to make. You essentially combine financing. 

In addition, you'll likely have a fixed interest rate on your new loan, which can make your payment amounts more predictable than the variable interest rate that you typically have on credit card debt.

Making a single payment instead of multiple each month can keep you motivated and help your situation feel more easily manageable. It also may mean that the amount you're paying each month is less than before.

Securing a lower monthly payment with consolidation has many positives, but you should be aware that it could also mean you'll stay in debt longer since everything you owe is all rolled into one amount. The longer you stay in debt, the more you pay to the lender over the life of the loan in interest. 

This alone shouldn't deter you from choosing debt consolidation if it's the right solution for you, though. In fact, this is the reason the debt consolidation industry exists. Many people find this solution fits their current needs and helps them take a step in the right direction. 

How to get started with consolidating debt

  1. Make a list of all the debt you want to consolidate. Include your balances, interest rates, and monthly payments.
  2. Contact multiple companies and get quotes from each. 
  3. Compare the quotes. Consider the loan terms (how long they last), the APR, and the monthly payment. Look at how the loans compare to each other and to what you're paying now.
  4. Choose the loan that makes the most sense to you. You could choose the lowest monthly payment, longest term, lowest APR, or whatever fits your goals the best. 

You need to find the right debt solution and, just as importantly, the right debt consolidation company to work with in order to address your financial needs. Thankfully there are now many online lenders who specialize in debt consolidation.

Make sure you take the time to compare all your loan options and read the fine print when it comes to the loan terms they are offering you.

What is the best debt consolidation company?

The best debt consolidation companies will work with you to determine what type of consolidation may help you the most. The opportunities available to you really depend on the type of loans you have and what your loan repayment terms could be. Term length is typically between 5 and 20 years, depending on the amount of debt you have and the type of consolidation you choose.

Best debt consolidation loans for each type of debt

All types of unsecured debt, as well as certain secured debts, are likely to be eligible for debt consolidation. The most common situation is that people have multiple types of high-interest debt that they haven't been able to pay off. Here's a look at some of the more common types of debt and how you could improve your situation:

Student loans

Federal loans can be consolidated into one federal consolidation loan. The interest rate on the new loan will be the weighted average of the interest rates of the loans you're consolidating. Never pay any company a fee to consolidate a federal student loan. Simply go to studentaid.gov to find out your options.

Another option for education loans is to refinance them. When you refinance, your loans are consolidated at a new interest rate. This can be a great way to lower your interest rate or reduce your monthly payments by extending your payment period. Refinancing is available for both federal and private student loans, but be aware that you will lose certain protections on your federal loans, like income-based repayment options, if you refinance them. You'll also typically need a good credit score to qualify for refinancing.

Here's one of our favorite sites for refinancing student loans

Credible Benefits

  • Accepts Credit Scores From 630
  • 100% Free Prequalification
  • Works with Federal, Private, Parent PLUS Loans

Credit cards and other unsecured debt

If you have unsecured debt, working with a top-rated debt consolidation company could reduce your debt payments and help you avoid bankruptcy. If you're struggling with high credit card balances and feel like you'll never be free of them by just paying the minimum payments each month, a debt consolidation loan could reduce the amount you pay each month.

The best debt consolidation companies offer free savings estimates with no obligation. Be sure to always check the fine print so you fully understand the terms of the offer.

Auto and home loans

With car and home loans, you'll typically want to refinance rather than consolidate. As with consolidation loans, you'll want to get multiple quotes and carefully review the terms of any refinance loans you're considering. 

Learn more about how to know if it's a good time to refi your mortgage. 

Alternative consolidation options

Personal loans

Traditional loan consolidation may not be the most affordable option for you, depending on the interest rates involved. If you are very cautious about your finances and can 110% manage your expenses, then a personal loan may be a more affordable option.

Some of the top-rated companies offer personal loans up to $50,000 and $40,000 respectively, and the loan application process is not complicated. If you qualify, you could use a personal loan to pay down your debts as long as you use the money responsibly. 

For more on this financing option, check out our best personal loans.

Balance transfer credit card

If you think you can pay off your debt in less than 21 months and you have good credit, you might choose a 0% intro annual percentage rate (APR) balance transfer credit card.

All of your payment goes toward reducing your balance when you aren’t paying interest. You might need to have good credit to get the best balance transfer deal and keep in mind that balance transfer fees may apply.

Home equity line of credit (HELOC)

In some cases, you might have too much debt to pay it off with a personal loan or a credit card balance transfer. A bank or credit union might let you use your home as collateral to get a bigger loan if you’ve built up a large amount of home equity over time. You can then use this money to pay off your high-interest debt and then repay your home equity loan or line of credit.

You can usually get a better rate than you would with a personal loan because you secure the debt consolidation loan with your home. However, this can be risky because you’ve taken unsecured debt and tied it to your home’s value. If you fall behind on your loan payments, you could lose your home.

Debt settlement companies

Debt settlement companies negotiate with your creditors on your behalf. This option is best if you've fallen behind on payments or anticipate you will fall behind soon. 

For debt settlement, we recommend:

Get rid of $25,000 in credit card debt

Learn More

If you're not sure whether debt settlement or debt consolidation is best for you, we recommend:

Get Out of $30,000 or More of Credit Card Debt

Learn More

FAQs about how to combine loans

Does consolidation hurt your credit score?

Taking out a loan or opening a new credit card will result in a hard inquiry to your credit report which can temporarily lower your score. Longer term, any impact to your credit score (positive or negative) will be determined by which method you use to consolidate your debt and whether you make your payments on time.

Is it smart to consolidate your student loans?

Student loan consolidation can be a smart decision for many borrowers. Consolidation can lead to lower monthly payments. But consolidation doesn’t always result in a lower rate of interest, and extending payment over a longer period of time could increase the amount of interest you’ll pay. 

Just be sure you're clear on the type of consolidation you're doing and that you're aware that if you refinance federal loans into a private student loan, you will lose federal protections associated with your loan. 

Will my credit score go down if I pay off a loan?

Your credit score might go down when you pay off debt. This dip in credit score is usually temporary, and your credit score can rebound quickly if you continue to make on-time payments on your other debt and work to maintain a low credit utilization ratio.

Bottom line

Debt consolidation can be a helpful way to get out of debt. Be sure to consider whether a loan is right for you and that you fully understand the terms of your loan.

Even after debt consolidation, continually monitoring your finances will help make sure you don't get into unmanageable debt ever again. Once you have the right mindset, you'll be unstoppable in achieving your personal finance goals.

National Debt Relief Benefits

  • No upfront fees
  • One-on-one evaluation with a debt counseling expert
  • For people with $7,500 in unsecured debts and up

Author Details

Christine Yaged Christine writes about credit cards, travel, entrepreneurship, and business. She's been in digital marketing and technology for her entire career and loves it. She believes everyone has the power to achieve success on their own terms. Her expertise is in optimizing the heck out of credit card points, entrepreneurship, investing, and all things Internet. Christine and her husband have mastered credit card point hacking to travel and stay in exotic places around the world. They live with their crazy Goldendoodle, Nala Fancypants, in Delray Beach, FL and love to cook... and eat. Duh.

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