5 ways a Debt Consolidation Loan can Help You
If you are struggling with your debt, or if you just need to find a way to save some money, a debt consolidation can be a huge help. Unfortunately, not a lot of people understand how these loans can help them improve their finances. These are five ways that a debt consolidation loan can really help you and your family.
- All of your debts will be paid off. The first thing that happens after you apply for debt consolidation is that all of the debts that are being consolidated are immediately paid off. If you’re getting harassed by debt collectors, this will end it.
- You’ll get a lower interest rate on your debt. A debt consolidation loan can offer a much lower interest rate on debt than most other credit cards. You’ll pay a fraction of what you paid before your went through debt consolidation.
- You’ll get a lower monthly debt payment. Your monthly payment can be cut in half with debt consolidation. Lowering your credit score, combining your debts together, and stretching out your payment term will give you a payment that is hundreds of dollars less than what you were paying before going through consolidation.
- Your credit score might improve. While it’s not a guarantee, many people report that their credit scores improved after getting a debt consolidation loan. This might be because paying off your debt means that the accounts that brought down your score now appear as “closed” instead of “delinquent” or “past due”. In other cases, closing down a high number of accounts can make your report look better (of course, you will need to do this on your own after getting a debt consolidation loan). While this isn’t true for every type of credit report, there might be a chance that your score will go up by a few points.
- You’ll be able to finally get out of debt. The best thing about a debt consolidation loan is that it will allow you to make actual progress on paying off your debt. Instead of paying money every month just to make sure that you don’t get behind, you’ll know that your money is going towards paying off the principal of the debt.