You may be considering a debt consolidation loan in hopes of paying off debt at a much lower interest rate and having one easy, convenient payment.  These are very good reasons to consolidate your debt.  In the process of finding the best debt consolidation solution, try to apply these five secrets of successful debt consolidation that can get you on the right track with your financial goals and debt payoff. 

Put Down the Credit Cards

If you are seeking a debt consolidation loan, you want to discontinue using credit cards.  Studies have shown that people, who consolidate their debt, typically run up their credit cards again.  In order to prevent this from happening, you must put down the cards, and learn to spend within your budget and work on a cash only basis.  By establishing this habit alone, you will make your debt consolidation much more successful. 

 Seek Reputable Loan Consolidation Company

Be sure not to confuse a loan with a debt management program or a debt settlement program.  These are not the same.  A debt management program is a program where a company takes all of your debt, contacts your creditors on your behalf, and negotiates a lower interest rate and payment.  The debt would remain on the credit cards, and you would make one payment each month to the debt management company.  Then, the debt management company would disperse the payments to each individual creditor.  Unlike a loan, all of your credit cards will have different interest rates, and there is no loan that clears the balances off the cards.  You are simply paying a monthly fee for someone to get you lower rates and pay your bills for you.

Try Using a Credit Union

 Credit Unions are a great alternative to banks because they typically do not charge the fees that banks do.  They are a group of people working together for the common good of the community.  Therefore, they typically offer better rates and are more willing to help with consolidation loans or other types of loans.  Try contacting a local credit union near you to see if they offer any type of debt consolidation loans before contacting a bank. 

Try Using Peer-to-Peer Lending

If you are unsuccessful at the bank or credit union in finding a consolidation loan or qualifying for a loan, one other choice that you may want to consider for a loan is peer-to-peer lending.  There are many sites online that offer peer-to-peer lending at very reasonable interest rates.  Peer-to-peer lending is when an individual or a group of individuals pools their money together to lend to someone who needs a loan.  In turn, each person receives his or her money back in addition to the interest you are paying on the loan.  The interest rate is typically a higher yield for the person lending than most savings accounts.  Therefore, it is a win-win situation for both parties, as long as they both uphold their end of the bargain. 

Never Use a Student Loan to Consolidate Your Debt

As a counselor, I have heard clients tell me that they have used student loans to consolidate their credit card debt.  This is a bad decision all around.  One, because if it ever gets to a point where you cannot pay your debt, you cannot discharge student debt in a bankruptcy.  Two, student debt payments are fixed payments.  They are typically not a minimal amount like a credit card payment.  So, this payment may be more difficult to make when the time comes to make it.  Take my advice, and stay away from student loans if at all possible.   

If you can follow these simple suggestions, you will be more successful in your loan consolidation and debt free for good!  Do you have any debt consolidation tips?