Black Americans have more debt than any other group in the country. Systemic racism within lending, credit, medicine, and the legal system have played a crucial part in stoking the fires of our financial struggles. This is where debt consolidation comes in.
Debt consolidation loans take outstanding debt such as credit card, medical, etc., and combine them into one payment. Typically, the loans come with lower interest rates, or the interest rates combine existing debt into a lower payment.
But not all consolidation loan programs are the same.
Two standard types of loans are offered: secured and unsecured. Secured loans require collateral - like a car or home - for the bank to issue the loan. Unsecured loans don’t have the same requirements.
Be mindful when applying for either of these, however.
Some loans are offered through debt management programs that require any revolving credit to be closed. While they may help lower payments, closing out credit can tank credit scores significantly.
Further, there are plenty of scam debt consolidation companies out there. Many predatory lenders target the Black community, so do your research.
Debt is a part of life, and for us, it’s been made worse by systemic racism. Whether you decide to consolidate or not, remember the first step is to research your options.