• loans used to make small purchases, consolidate debt, and for personal use
• generally small loans with balances from $2,500-10,000
• interest rates on these loans should be quite high (3 or more points above the prime rate: view prime rate
• terms on these loans vary from 3-7 years.

Auto Loans:

• auto loans for both new and used purchases
• loan balances should be at least $2500 or more
• interest rates on these loans should be at least 2 or more points above the prime rate: view prime rate
• the remaining term on these loans should be for 2 or more years.

Retail Loans:

• loans used for purchasing furniture, appliances and other big retail items
• loan balances should be at least $2,500 or more
• interest rates on these loans should be at least 2 or more points above the prime rate: view prime rate
• the remaining term on these loans should be for 2 or more years.
  

RV Loans:

• loans used for purchasing recreational vehicles
• loan balances should be at least $2,500 or more
• interest rates on these loans should be at least 2 or more points above the prime rate: view prime rate
• the remaining term on these loans should be for 2 or more years.

Student / Education Loans:

• two types of student loans:
  
  
  1. federal student loans that include Stafford, PLUS, Perkins and other federal student aid programs
     
  2. private education loans that were obtained from private lenders
     
     
• federal student loans should be consolidated under the federal consolidation program to receive the maximum benefit: view our federal student loan consolidation program
  
  
• private education loans can be consolidated with your other loans
  (or you can consolidate private loans with an aggregate balance of $8,000 or more into a single private loan consolidation program: see details at our partner site CFSLoans.com)
  

Credit Cards:

• open credit card balances can be consolidated with other loan balances
• interest rate charges on open credit line balances should be at least 2 or more points above the prime rate: view prime rate
  

Debts and Liens:

• medical and dental expenses
• government and court liens
• support payment liens
• other imposed debts

Use the worksheet to add up your loan debt

Use these calculators to estimate your payoff schedule and amount.

• Use the "Monthly Payment" calculator
  to estimate the amount you need per month to payoff your debt over a given period of time (in months).
  
  — enter the best interest rate you can receive
  — enter the number of years you need to repay the debt
  — press "calculate" to estimate repayment amount
  
  
  
• Use the "Repayment Period" calculator
  to estimate the time it will take to payoff your debt with a budgeted fixed amount that you can pay each month.
  
  — enter the best interest rate that you can receive
  — enter the amount you would like to pay
  — press "calculate" to estimate payoff terms
  
  
  
• Use can also download our "Debt Payoff" worksheet to run your numbers on your desktop: download worksheet
  

Monthly Payment Repayment Period Debt Balance: $ Debt Balance: $ Interest Rate: % Interest Rate:   % Repayment Term: months Monthly Payment: $ * * Monthly Payment: $ Repayment Period:   years months

Is this the right option for you:
this may be an ideal option if your budget allows for an extra amount to be used to quickly payoff your loans.

You may consider consolidating your existing loans under a lower rate and budgeting the same amount to payoff your consolidation loan: See Option 2: Consolidate Your Loan.

First thing: analyze your budget:

analyze your monthly budget to determine how much money you can allocate for this payoff plan.

Link to our budget planning worksheet: click here

Identity and list your loans:

use the QUICK worksheet to identify each loan
that you would like to payoff. List the loans in order from the lowest loan balance to the highest.

Let's illustrate this concept by using the following loan worksheet with a period of 5 years before the final loan is paid (assuming no additional debt):

Balance Payment Rate Loan1 $800 $32 12.5% Loan2 $1200 $40 12.5% Loan3 $2777 $67 12.5% Loan4 $8530 $175 8.00% Loan5 $18997 $453 6.75% Total Period to payoff final loan: 5 years

Group your loans:

group at least 2 low-balance loans together and pay them off within 6-12 months.

You may use a credit card transfer program to get the low transfer interest rate during your payoff period.

These card transfer programs allow you to transfer any outstanding debt balance that you may have over to this card that has a very low interest rate for an introductory period of time.

Once you payoff these two loans, group the next low-balance loan and pay it off quickly over 12-24 months.

This payoff grouping builds a momentum where you erase 1-2 loans quickly from your monthly payment plan. The savings can then be applied to other monthly loan payments to reduce your aggregate loan balances quickly.

Example:

Take the first two loans on your list (Loan1 and Loan2) and group them together.

Set a budgeted payoff plan within 9 months:

— your payoff balance: $2000
— current debt payment: $72 ($32+$40)
— additional pay needed to payoff within 9 months: $162
— (see calculation)

— total monthly payoff amount: $234 ($72+$162)

The extra $162 per month will need to come from budget planning by reducing other monthly expenses.

Note that you will still continue to pay monthly payments on your other outstanding loan debt

Payoff and group again:

once you have successfully paid off the two loans in 9 months, your current loan portfolio will look like this (assuming no additional debt and payment reduction on your other loans):

Balance Payment Rate Loan1 $0 $0 12.5% Loan2 $0 $0 12.5% Loan3 $2372 $67 12.5% Loan4 $7308 $175 8.00% Loan5 $15450 $453 6.75%

Now take the next loan and apply the same payoff proceeds to this loan:

— your payoff balance: $2372
— monthly payoff amount: $301 ($234 above + $67 current pay)
— time needed to payoff: 8.3 months (see calculation)

Now after 9 months, you current loan portfolio looks like this (assuming no additional debt and payment reduction on your other loans):

Balance Payment Rate Loan1 $0 $0 12.5% Loan2 $0 $0 12.5% Loan3 $0 $0 12.5% Loan4 $6004 $175 8.00% Loan5 $11698 $453 6.75%

Continue payoff:

continue your group payoff by taking the next loan and applying the same payoff proceeds:

— your payoff balance: $6004
— monthly payoff amount: $476 ($301 above +$175 current pay).
— time needed to payoff: 13.2 months (see calculation)

After 13 months, your current loan balance will look like this:

Balance Payment Rate Loan1 $0 $0 12.5% Loan2 $0 $0 12.5% Loan3 $0 $0 12.5% Loan4 $0 $0 8.00% Loan5 $6079 $453 6.75%

apply the same payoff proceeds to payoff your last loan:

— your payoff balance: $6079
— monthly payoff amount: $929 ($476 above +$453 current pay).
— time needed to payoff: 6.9 months (see calculation)

Summary:

by grouping low-balance loans together and budgeting an additional $162 for debt payoff, you were able to eliminate this debt within 3 years. That is two years less than allowing these loans to run their term.

The magic of grouping is that it eliminates low balance loans quickly so that you have the motivation and additional funds to pay down your next loans.

You can achieve the similar payoff time if you allocated an additional $162 each month to pay down a consolidation loan. See example under Option 2.

Grouping works best when you develop a spending plan that meets your budgeted allowance for living and debt payoff.

See our topic on budget planning

Is this the right option for you:
this may be an ideal option if you can consolidate your loans under a repayment plan that offers an interest rate that is lower than the weighted interest rate charges on your existing loans.

Estimate your weighted interest rate:

	1.	a: enter each loan balance that you want to consolidate b: enter your loan debt interest rate c: press calculate. it will multiply the balance by its current interest rate to give you a weighted factor for each loan:
		Loan Amt	Interest Rate	Weighted Factor
		X	% =
		X	% =
		X	% =
		X	% =
		X	% =
		X	% =
		X	% =
		X	% =
	2.	Sum the factors together to get a weighted average:
	3.	Sum the outstanding balance of all loans:
	4.	Divide the weighted average by the loan balance.		%
		The interest rate on your consolidation loan must be lower than this "weighted interest rate" to benefit from an overall lower consolidation interest rate.
	5.	You can remove low-interest rates loans from your list and pay them off separately. Then calculate your weighted average to consolidate your remaining loans.
	6.	Link to our Debt Consolidation Worksheet to estimate your repayment plan using a debt consolidation rate and term.

Consolidation example:

Let's assume that you had the following loans that will take 5 years before the last loan has been paid off.

Balance Payment Rate Loan1 $800 $32 12.5% Loan2 $1200 $40 12.5% Loan3 $2777 $67 12.5% Loan4 $8530 $175 8.00% Loan5 $18997 $453 6.75% Total $32,304 $767   Total Period to payoff final loan: 5 years

If you consolidated the above loans under a consolidation rate of 7.00% with a 10-year repayment plan, you would save around $392 each month over current payments.

These savings can be applied as an extra amount each month to pay down your consolidation loan within 4 years — 1 year earlier if you didn't consolidate.

Consolidation Loan: 10-yr Repayment Term   Balance Payment Rate Total $32,304 $375.08 7.00% Savings (extra pay) $392.00 ($767-$375) Payoff 48 months

If you budgeted an additional $162 as illustrated under Option 1 above, you will be able to eliminate this debt within 3 years.

Current Outstanding Loans   Balance Payment Rate Loan1 $800 $32 12.5% Loan2 $1200 $40 12.5% Loan3 $2777 $67 12.5% Loan4 $8530 $175 8.00% Loan5 $18997 $453 6.75% Total $32,304 $767   Consolidation Loan: 10-yr Repayment Term   Balance Payment Rate Total $32,304 $375.08 7.00% Savings   $392.00 ($767-$375) Payoff Amounts Current   $375.08 (payment) Extra1   $392.00 (savings) Extra2   $162.00 (budgeted amt) Payoff 38 months

Is this the right option for you:
use this option if you find yourself unable to repay your current debt balances and want to avoid bankruptcy.

This may be the right option if circumstances such as unemployment, loss of income, or other unfortunate event prevents you from repaying your debts.

This option is also recommended if you have collection agencies threatening action. Counseling services can advise and protect you from adverse action.

Credit counseling services:

credit counselors will be able to discuss your situation with your debt lenders to either forgive part of the debt or structure a repayment plan that fits your budget.

They will also work with you to establish a monthly repayment plan that fits your budget.

How the program works:

you first complete an enrollment form that authorizes the credit counselor to discuss your situation.

click here to start that from our national list of debt counseling professionals

the credit counselor will contact your creditors to negotiate a repayment plan that is significantly less than you currently pay — why? creditors will welcome partial payment rather than no payment.

credit counselors will then setup a monthly repayment plan that works for you

you will then make your monthly payments to the credit counselor who in turns divides the payment among the creditors based on the negotiated repayment amount

in most cases, creditors will inactivate your credit cards to avoid charging additional debt.