If you have a number of bills to pay, you may want to use a debt consolidation loan calculator to see if a personal or home equity loan is the right solution for you. Instead of paying numerous high interest bills each month, you might be better off making one lower interest payment. You’ll only know for sure, though, if you use a debt consolidation loan calculator.

The first thing you need to do to use a debt consolidation calculator is to gather all of your bills together. Make a list of the bill, the amount owed, the monthly payment, and the interest rate.

The next thing you need to do is figure out what kind of loan you will get to consolidate your debts. The two primary debt consolidation loans are the home equity loan and the personal loan.

If you have any equity in your home, the home equity loan is the way to go. You will take out a second (or a third) on your house and pay the bank back a lump sum each month. The primary advantage of a home equity loan is that you will get a lower interest rate. The primary disadvantage is that if you do not make the payments, it can send your house into foreclosure – not a small thing these days.

If a home equity loan is not possible, your other option is to get a personal loan. Personal loans will have higher interest rates than home equity loans because they are not backed by recoverable assets. However, you don’t stand to lose anything if you do not pay them off. You can always declare bankruptcy and discharge a personal loan.

Once you have determined which loan you will get and what the interest rate will be, you plug the information about your current debt situation and the information about the new loan into a debt consolidation loan calculator. The calculator will then tell you what your monthly payments will be on your new loan. It will also tell you the amount saved per month, the interest saved, and the amount saved over the life of the debt.

One of the advantages of debt consolidation is that you only have one bill to pay each month.

The other advantage is that generally, your payment is lower and is at a lower interest rate than your credit card bills and other debts were at. That means, over time you will pay a significant amount less in interest.

It is likely that when you take out a debt consolidation loan, your credit score will rise after about six months. That is because you will be more likely to have paid your debt each month and because you don’t have so many little accounts. Note that this won’t happen the first month because as you adjust your loans, you could actually see a small dip.

If you have a lot of high interest small bills each month, consider using a debt consolidation loan calculator to see if consolidation makes sense in your particular situation.

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