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What is Debt Consolidation?
A debt consolidation loan can be a useful tool in gaining control over your debt, especially if you’re subject to high interest payments. While they’re most popularly used to consolidate credit card debt, you can also use them for other types of loans, including auto loans, personal loans, and bad credit loans. There are generally two reasons why you might want to consider getting a debt consolidation loan.
The first is that you want to save money on your interest rate. If you have a high APR on one or more credit cards, for example, you may qualify for a better rate on a debt consolidation loan. It also gives you a finite end time because it’s a type of installment loan, rather than an open line of credit like a credit card.
Another scenario you might be facing is having trouble paying your credit card and loan bills. In some cases, you may be able to take out a debt consolidation loan with a longer repayment term. Although you’ll probably end up paying more interest, it could prevent you from defaulting on your loan and damaging your credit score.
Keep reading to find out more about debt consolidation loan benefits and how to qualify for one.
| Loans |
Amount |
Loan term / Interest |
Benefits |
|
(Personal loan)
|
Ranges from: $500
To: $35,000 |
3 Month to 6 Years
APR: 5.99 - 36% |
Bad Credit: Accepted
Creditscore: At least 580
Minimum Income: $2000 per month
Type of service ? |
|
(Personal loan)
|
Ranges from: $100
To: $5,000 |
Up to 1 year
Show loan fees ? |
Bad Credit: Accepted
Minimum Income: $1000 per month
Type of service ? |
|
(Personal loan)
|
Ranges from: $300
To: $35,000 |
2 Month to 7 Years
APR: 6.90 - 530% |
Bad Credit: Accepted
Creditscore: At least 550
Type of service ? |
|
(Personal loan)
|
Ranges from: $500
To: $40,000 |
2 Month to 5 Years
APR: 5.99 - 36% |
Bad Credit: Accepted
Creditscore: At least 580
Type of service ? |
5 advantages of debt consolidation loan
Debt consolidation entails the acquisition of a single loan and using it to settle all the other indebted accounts. Most people own multiple credit accounts and numerous credit cards, each bearing some balances. Securing a debt consolidation loan helps you to merge everything into one source. Hence, the tragedy of having to meet multiple deadlines will be no more. You’ll just have to focus on a single monthly repayment. This, in turn, helps you to adequately manage your finances.
Reduced interest rates
Another amazing benefit of consolidated loans is that it relieves you of huge interest charges. Credit cards bear higher interest rates as compared to other forms of interest rates. By securing debt consolidation loans, you’ll be in a position to enjoy minimal interest rates which, in turn, would save you several dollars in the long-run.
Physiological benefits
Consolidated loans will give you peace of mind to concentrate on other important tasks at hand. You do not have to worry about how you’ll repay multiple loans at the end of each month, you’ll only have to deal with a single creditor.
Helps improve your credit record
Consolidating your debts will greatly improve your credit profile. Remember, your credit record is your overall financial reputation. To minimize the chances of damaging your credit score, consolidate your debts into a single loan so that you’re able to make lump-sum timely repayments. A damaged financial record can jeopardize your credit movement. For instance, it might deter you from obtaining mortgage or car repair loans.
Also, consolidating your loans into a single loan can go a long way in rebuilding damaged credit scores. If you make consistent late loan repayments, your credit score can be hurt. It’s, therefore, advisable to consolidate your loans so that you are able to stay on top of repayments. This will greatly help you replenish your creditworthiness.
