Credit card debt is like wet cement; the longer you stay, the harder it is for you to get out. But don’t lose hope because there is a way out. One of which is Debt Consolidation Loan. In general, a debt consolidation loan is paying your own debt at a lower interest rate. Continue reading to know how debt consolidation loan helps you get out of credit card debt.
What is Credit Card Debt Consolidation Loan
It is a type of personal loan from a bank or other financial institution like online render or credit union. It aims to get the best and fixed monthly payment and interest rate for you to pay off your debt faster.
5 Debt Consolidation Loan Facts
If you’re stuck and don’t know where to start, consider these facts before applying for a debt consolidation loan.
- It can improve your credit score– Because different banks and credit unions provide personal loans; you have the opportunity to compare their loan terms and interest rates. You can make a smart decision which is the most beneficial for you.
- It makes your payment plan predictable- One advantage of personal loan is getting a fixed payment and interest rate. This will help you prioritize and budget your money wisely.
- They are unsecured- Credit card consolidation loans cannot take your house, car, or other properties in case you are not able to abide by the terms of payment.
- Credit Score is a big factor in getting a personal loan- Consolidation loan would work for you if your credit rating is high. But if it is poor, banks will give you a higher interest rate and payment.
- The amount of your loan will not be as much because they are not secured.
- You will pay one-time origination fee- The bank or credit union will use this fee to process your loan. In the US, it is commonly 0.5% to 1% of the total amount of your loan.
Do I need it?
There are many ways to consolidate your loan but choosing which the best is for you to depend on your current financial situation. Review the factors you need to consider for a consolidation loan and evaluate it if fits. Feel free to comment your questions below so we can help you. Keywords: debt consolidation loans bad credit, debt consolidation loan calculator, debt consolidation loan rates, debt consolidation loan Bank of America, debt consolidation loan chase, unsecured debt consolidation loan, debt consolidation loan definition