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A Guide to Debt Consolidation Loans and Freedom from Personal Debts

Consolidation Loans

Interested in what are debt consolidation loans? Read this guide to avail your consolidation loan and manage your debts, saving money, towards a debt free life. Try our online credit counselling to manage your debts.

Like many Americans, you may have accumulated credit card debt balances in one or many credit cards. Credit card advances, though the most convenient, come with a very high rate of interest, and so you may find that you are repaying a substantial amount of your debt, in servicing only the interest part of your credit card loans. This gradually reduces your financial independence and leads you to a debt trap, where most of your income is spent in repayment or service of your debts. Your credit scores also nose dive with every passing day.

So how do you get out of your debts, how you manage your debt and how do you get freedom of debt relief? It is actually simpler than you thought. Just see if you can get a personal loan, large enough to cover all, or most of your credit card debts.

A Guide to Debt Consolidation Loans

A debt consolidation loan can be a helpful financial tool for managing and reducing multiple debts. It involves taking out a new loan to pay off existing debts, consolidating them into a single monthly payment. Here's how a debt consolidation loan can help:

Simplified Repayment: With multiple debts, it can be challenging to keep track of various due dates and payment amounts. A debt consolidation loan simplifies the repayment process by combining all debts into one monthly payment, making it easier to manage.

Lower Interest Rates: If you qualify for a debt consolidation loan with a lower interest rate than your existing debts, you can save money on interest payments over time. Lower interest rates can help you pay off your debt more efficiently.

Fixed Repayment Term: Debt consolidation loans usually come with a fixed repayment term. This means you have a set timeline to repay the loan, which can help you stay disciplined and motivated to become debt-free.

Improved Credit Score: Consistently making on-time payments on your debt consolidation loan can positively impact your credit score. It demonstrates responsible financial behavior, which can improve your creditworthiness over time.

Avoiding Late Payments: By consolidating debts, you reduce the risk of missing payments and incurring late fees or penalties. This can prevent your debts from spiraling out of control.

Reduced Stress: Dealing with multiple debts can be stressful. A debt consolidation loan allows you to focus on one payment, easing financial stress and providing a clearer path to becoming debt-free.

No More Collection Calls: If you were receiving collection calls due to missed payments, consolidating your debts and making timely payments can put an end to these calls.

Avoiding Bankruptcy: For some individuals facing overwhelming debts, debt consolidation can be an alternative to filing for bankruptcy. It provides an opportunity to repay debts in a manageable way.

However, it's crucial to remember that a debt consolidation loan is not a magic solution. It requires responsible financial management and discipline. Before taking out a debt consolidation loan, assess your financial situation and make sure you can afford the new loan payments. Additionally, avoid taking on more debt while repaying the consolidation loan to prevent falling into the same debt cycle again. Consider seeking advice from a financial advisor to determine if debt consolidation is the right option for your specific circumstances.

Advantages of taking a debt consolidation personal loan to pay off your credit card bills and loans:

No more servicing of loans in high interest environment

Credit card balances come with high rate of interest. Multiple credit card balances involve multiple credit card payments in different dates, involving financial inconvenience and management. They also spoil your peace of mind, give you stress, and dry up your finances, and a major part of your hard earned money goes in servicing these payments. A credit consolidation loan can put a stop to all these expensive payments, and help you pay back in much lower rate of interest, saving you major chunks of money every month. Also, you now have only one EMI or instalment to pay every month, so a single day. Managing your personal and home finance gets way simpler.

It acts as a natural boost to your credit scores and credit records

No more missed credit card payments, no more multiple loans and clean credit record. You can set right your financial health again, with some discipline.

Earn by making lower monthly payments. Save your hard earned money.

Yes, since your personal loan is taken at a lower interest rate, the monthly outgo that you were making would come down, when compared to all credit card payments combined. It helps in better financial health and enables you to take control of your finances again, with your own debt management. What you save is what you earn.

Debt consolidation takes care of other expensive loans as well

This means, if you have taken pay day loans, or medical loans, they too come with very high rate of interest. You can pay those off as well, with your debt consolidation loan, and live a happier life, taking care to service the consolidation personal loan only.

Graduate to the world of much better financial planning. Be Independent!

Credit card loans do not come with end date, and you are always tempted to make a payment somewhere near the minimum amount payable, and hope for betterment next month, which does not really happen. Personal loans, on the other hand, come with a fixed tenure and fixed instalment amount. So you can freely plan on how to get rid of all debts, and live a debt free life, getting out of all your debts. After six months, generally speaking, personal loans do not carry any pre payment penalty, so in case of an increased income or win fall gain, you may choose to pay your personal loan in its entirety or in part, helping you further get out of your debts.

Points to look for, when you shop for your Debt Consolidation Personal Loan:

The rate of interest

This primarily depend on your credit scores, but you can always negotiate for better rates. The rate offered should be substantially lower that your present credit card rates or pay day loan rates, for you to become financially comfortable over time. Opt for direct payments to credit card by the consolidation loan provider whenever possible, to help you maintain financial discipline. Please note that these loans have a wide band of 5% to 36% rate of interest, and a lot will depend on your negotiation and your banker, along with your credit scores.

The EMI amount and the Tenure of the loan

You should be able to comfortably service the EMI amount of the personal loan that you are taking as a consolidation loan. Not servicing the EMI can land you into major problems. So make your calculations and be sure to arrive at an amount that you are comfortable with, this is important. The next part you should look into is the tenure of the loan. Longer tenure decreases the EMI amount, but you stay engaged for a longer period, and make higher outlay, in absolute dollar terms. Make a balance, for, this exercise is to free you of all your debts, with financial discipline, to reap the benefits later.

Approach Multiple Providers, online and offline, for getting multiple offers

Upgrade, Marcus, SoFi, Happy Money, LightStream, Universal Credit, , Best Egg, Discover, FreedomPlus etc are some of the best known names for providing consolidation loans as personal loans. However, each of them offer different rates, and have their own disadvantages and advantages. We suggest you search for each of them, and get an offer from at least 5 of them, so that you get the best deal to consolidate your multiple debts elsewhere

Search for a Consolidated Loan Provider now, and get out of your debts. Apply for a fixed-rate, fixed tenure, no fee personal loan today:

TIP: When you pay off your credit cards in full, do not use the card for a month and get at least 1 bill that shows no dues. You can also make a little over payment for best affect. This will restore the credit period of your credit card, and you will get the credit period again from your credit card. Thereafter, remember to pay your credit card balance in full, whenever you use the card. This will build great financial discipline, and will positively affect your credit scores in a short period of time. It’s a good feeling.
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