A huge number of people are known to carry debts and obviously, you are not the only one who is neck-deep in debts. You must be feeling overwhelmed and wondering how to get out of it. In this context, we know from https://www.lexingtonlaw.com that “the total consumer debt is on track to reach $4 trillion by the end of 2018, according to an analysis of Federal Reserve data. That’s an amount with twelve zeros. Collectively, Americans owe 26 percent of their income to this debt and spend 10 percent of their individual monthly income on non-mortgage debts like car loans, credit card accounts and student or personal loans.”
We find while browsing https://www.forbes.com that “according to Make Lemonade, there are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the U.S. alone.” The statistics reveal the sorry condition of the Americans, many of whom are actually juggling more bills and debts than they can actually handle and so they are literally struggling to repay their debts and get out of this financial mess. Debt consolidation may prove to be a boon for many. You could take control of the situation and tread on a positive road to debt elimination. Here are some of the benefits of taking out a personal loan for debt consolidation.
Debt consolidation could help in reducing the actual number of bills that you are compelled to juggle every month. This allows you to make only one single monthly payment. You could use personal loans for paying off these multiple credit card debts by consolidating them and rolling them under one umbrella. Here are some benefits of using a personal loan for debt consolidation.
You Could Get a Personal Loan at a Lower Interest Rate
Personal loans come at a relatively lower rate of interest as compared to the high-interest rates provided by a majority of the credit cards. If you take out a lower-interest personal loan for consolidating your existing debts, you could substantially lower the actual amount you need to pay every month as interest. Personal loans are known to charge simple interest. Moreover, debt consolidation with a low-interest personal loan would make things easier and simpler as you would need to make just one loan payment every month instead of multiple credit card payments. You may get in touch with experts from Nationaldebtrelief.com for expert advice and perfect debt solutions.
A Personal Loan for Debt Consolidation Implies Just One Payment Every Month
You could now easily shift your debts from multiple creditors to just a single creditor by taking out a personal loan to consolidate your multiple debts. You no longer need to keep track of so many different debt accounts and you do not need to remember the different due dates every month. There is absolutely no scope of forgetting your monthly repayment dates if you are handling only one single debt. You would automatically make timely payments. You would be able to devote more time to and be far more organized in your monthly bill payments.
A Personal Loan Would Facilitate Quicker Debt Pay-Off
You could now easily pay off all your debts in a relatively shorter time span with just one payment each month and also, a fixed rate of interest. We know that generally, credit cards do not offer any kind of set repayment period. In the case, your balance seems to be high; it is not possible for you to ever get out of debts by making the customary minimum balance payments each month. We know that personal loans generally provide three to maximum five years of loan repayment term and accordingly you are free to plan out how to schedule your monthly installments and loan pay-out.
Some Things to Keep in Mind While Thinking of Debt Consolidation with a Personal Loan
Consolidating Debt Is Not Meant For Everybody
Debt consolidation using a personal loan helps to reduce your rate of interest, lowers your monthly repayments, and leads to considerable savings every month but debt consolidation using a low-interest personal loan may not be viable for everybody. You should opt for it provided you are okay with the terms and feel that they are just right for you. Experts have identified three basic groups of people who could benefit immensely from debt consolidation. They are:
- Individuals who are thinking of combining multiple loans into a single account.
- Individuals qualifying for a relatively lower rate of interest.
- Individuals hoping to pay off all their debts within a shorter time span.
However, you must ensure that you are eligible for a personal loan before applying for it. You must find the monthly payments affordable. Only then you may consider taking out a personal loan for debt consolidation. In order to be eligible for a desirable personal loan to consolidate your debts, you must necessarily have a steady income proof and a good credit report & score. In the case, you do not earn adequate monthly income or if you are having a poor credit history, you must seek the help of a co-signer for qualifying. Do not forget even for a moment that there could be grave consequences if you miss your monthly payments on the personal loan you have used for debt consolidation. You need to have complete grip over your finances and there should be enough space for loan repayment in your monthly budget.
Avoid Debt Consolidation with a Personal Loan If You Cannot Control Your Spending
Financial gurus have identified two dangers associated with using a personal loan for debt consolidation. They are:
- Assuming that all your debt issues are resolved with this new loan.
- Taking out a fresh new debt as soon as you have consolidated your previous accounts.
You must necessarily understand that simply transferring debts is just not enough for eliminating debts forever. You must realize that by taking out a personal loan to consolidate your debts imply that you have just shifted your multiple debts and rolled it into one single larger debt in order to take the maximum advantage of a new improved repayment package or terms.
Debt consolidation simply cannot be an effective substitute for a comprehensive strategy that helps you to take total control of your financial issues and debts. You need to generate a repayment strategy once you are done with consolidating your debts with a personal loan. Chalk out a detailed budget and stick to it. Moreover, keep track of all your monthly spending. You need to introduce a few lifestyle modifications to stay on top of your debts.
Kelly Wilson is an experienced and skilled Business Consultant and Financial advisor in the USA. She helps clients both personal and professional in long-term wealth building plans. During her spare time, she loves to write on Business, Finance, Marketing, Social Media. She loves to share her knowledge and Experts tips with her readers.