Are you having trouble paying all your debts as they exceed your financial capacity? Are you having difficulty with organizing your payments, and you often lose track of them and end up missing the payment schedule?
This scenario is common among individuals who have multiple debts. If you are among the people experiencing this issue, then it is time for you to consider a debt consolidation.
Debt consolidation is basically taking up a new loan to pay off all your existing loans. Although it sounds like a risk rather than a solution, debt consolidation can have a positive impact. To know what debt consolidation can do for you, below are some of the benefits for individuals considering this solution.
Turn Multiple Debts Into One
Do you have multiple debts that are still active? Turning your multiple debts into one loan means you will only have to pay a single, usually monthly, payment for all of your debts. It can make repaying all your debts easy and result in a lower monthly payment than paying each of your debts separately.
This monthly payment savings is due to the longer payment period of the loan you take to consolidate your debt. When you consolidate all your debts, you will no longer have to worry about several monthly payments being on time, varying interest rates, etc. All of your loans are consolidated into one payment, which hopefully, also has the benefit of a low interest rate.
Lower Interest Rate
What is best about a debt consolidation loan is that you will have to pay a lesser interest rate than the combined interest rates you are paying for all of your existing debts. Plus, debt consolidation loans offer a lower interest rate compared to other loan options.
Reduce The Stress You Are Experiencing
Having too many debts will keep your mind overwhelmed thinking about the repayments of each debt. Opting to consolidate your loan into one loan will reduce this overthinking, and you will start to feel less stressed knowing you are working on eliminating your debt.
You will feel more in control over your debts, and you can now easily track and manage your debt. You will also notice a positive impact on your finances once you regain control over your debts, and you will be able to repay in no time.
Improve Your Credit Score
Consolidating your debts by taking up a personal loan will help you boost your credit score in the long run. It will only take a few months before you start to see an improvement in your credit score when you take a debt consolidation loan. This improvement is a result of a reduction in your credit utilization rate.
Be reminded that you will notice a sudden drop in your credit score when you apply for the loan, but this is just temporary. Normally, your credit score will drop after you acquire a new loan. Focus on the long-term benefit of this action though, as it will greatly help you pay off all your debts.
Pay Off Your Debts Faster
Credit cards usually take a long time to be fully paid as credit cards earn interest depending on how much you owe. Credit card companies usually don’t care if you pay it off for less than five years or even 20 years. And the longer you take in paying it fully, the higher the accumulated interest rate becomes.
When you pay it off one-time using the money you acquire from a debt consolidation loan, you will put an end to your accumulating interest rate, and you still save more money over time.
Before you apply for a debt consolidation loan, you should make a debt management plan first. Consider all factors such as the total amount of your debts plus respective interest rates, what kind of loan to take, and where to take the loan.
If you recently closed your bank account, it would be a bit complicated for you as you will have a limited option due to the given circumstances. In this case, you can look up lenders where you can get a cash advance with no bank account.
However, you still have multiple options like pawn shop loans, title loans, or acquiring the cash from a family or friend. The choice is yours so choose wisely and make sure that the option you select will help you solve your problem and not add to it.
Start Making Your Finances Better
Having multiple debts is a hindrance to obtaining financial freedom. It can also lead to bankruptcy, which is a situation no one wants to end up in. Now that you are presented with a solution to your problem, it is time to start acting to manage your debt. Shop around for the best personal loan offer that you can acquire to consolidate all your monthly debt payments into one loan.