Combining debt can be a smart move Is a consolidation loan right for you?

A consolidation loan takes all of the high-interest debt a person has accumulated from multiple sources (like credit cards and personal loans and lines of credit) and combines them into one larger but more manageable debt. Generally, a consolidation loan is a smart move if the loan reduces your interest rate, allows you pay down outstanding debt and puts you in a better position than continuing to pay multiple creditors would.

  • save interest costs,
  • lower their payments,
  • pay off debt faster,
  • simplify their finances, and
  • feel better.

Life happens and sometimes we find ourselves taking on debt we didn’t plan for. Often when we take on debt unexpectedly, it’s high interest, expensive debt like a credit card or other short-term credit. If one or two of those unexpected things happen, we can usually navigate through, but other times we find ourselves overwhelmed with debt and the stress it brings. How we found ourselves in the situation really doesn’t matter, moving forward and getting out of the situation is what’s important. Sometimes the best way to get out of the situation is a consolidation loan.

Lower payments, less interest

Depending on your situation, consolidating several high interest debts into a single lower-interest option can literally save you thousands. Credit cards often have interest rates as high as 20% or more; pay day loans are often worse because not only do they have a high interest rate, but they incur substantial service fees as well. Regardless of what type of credit it is, when we amass a large amount of high-interest debt, we often find we ourselves making only the minimum payments just to keep our head above water. We all know what happens when we only make the minimum payments, it takes forever to get out of debt. Well, maybe not forever, but a long time! A consolidation loan will offer a lower interest rate than what you will pay in revolving or other short-term debt. When you pay less interest, the net result is your payments are lower as well.

Pay debt down faster

One of the smartest strategies in debt reduction is to get rid of your most expensive debt. Even with lower payments, because you are paying a lower interest rate typically more of your payment goes to paying down the debt rather than just the interest. This means not only is your life more comfortable, but your debt is payed down significantly faster.

Make life easier

When you are only dealing with the one payment, your finances become much easier to manage. You’ll see your debt and stress levels decrease. You’ll gain confidence and control over your finances. You’ll simply feel better.

Make progress

We know how stressful the situation can be and we can help ensure you don’t find yourself in that position again. Once you lower your payments, you may find yourself in the position that you can not only reduce your debt, but you can increase your savings. Having an emergency fund of at least 6 months income is a one of the first steps to take towards financial well-being. If you haven’t done that, that’s usually where we tell people to start but each person and situation is different. With a little planning and advice, we can help you achieve the life you want. Come talk with us today.