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Can I Get a Debt Consolidation Loan?

Do You Have to Have Good Credit to Get a Debt Consolidation Loan?

If you're struggling to pay off your debts and can't find a good way to increase your income, you may be thinking about finding relief by other means. As you probably know, there's an entire industry that's devoted to helping folks pay down their consumer debts in a timely fashion. A significant amount of the activity that occurs in this industry involves a practice known as debt consolidation lending.

Debt consolidation loans are large loans that may carry relatively low interest rates. They are ideal for borrowers who carry large amounts of credit card debt. Debt consolidation loans enable these borrowers to pay off their high-interest debts and may dramatically simplify their debt payments.debt consolidation loan application form.

True to the "consolidation" in their name, debt consolidation loans are designed to reduce the number of monthly debt payments that a struggling borrower must make. Instead of 12 outstanding credit card bills, a credit card consolidation borrower only has to worry about making a single larger payment to his or her lender.

If you're behind on your credit card payments, you may be wondering whether you have to have good credit to obtain a consolidation loan. Unless you've been very lucky, your credit score is probably not as solid as you would like it to be. You might have a justified worry that you'll be unable to secure approval for your loan.

It would be ironic if you were unable to secure a credit consolidation loan as a result of your poor credit profile. After all, consolidation loans are designed to help borrowers who struggle with large amounts of credit card debt. Most such borrowers have less-than-ideal credit scores. Debt consolidation lenders that adhered to strict credit-score standards when screening borrowers would be cutting out a significant portion of their "target" clientele.

For this reason, it's possible to get a debt consolidation loan with bad credit. Many debt consolidation lenders are willing to issue loans to distressed borrowers. Unfortunately, such loans typically come with some problematic drawbacks.

High interest rates are one of these drawbacks. Whereas "prime" borrowers may be able to secure low-interest consolidation loans, borrowers who have poor or mediocre credit may have to pay through the nose for their loans.

Even in this low-rate environment, it's not uncommon for lenders to charge annual interest rates of 15, 20 or even 25 percent on their sub-prime loans. This might substantially raise your borrowing costs and negate any of your loan's potential savings. If you can't save at least 5 percent on your outstanding debts with a consolidation loan, this course of action may not be worth the hassle.

The potential need to collateralize these loans is another serious drawback. Although each lender's policy is slightly different, many may require you to put up some collateral as a condition of your loan. This could take the form of a car, house or other valuable asset. If you become unable to make the payments on your loan, this asset could be subject to seizure.

The prospect of doing further credit-score damage is a final weakness. Since these credit facilities are so large, the monthly payments on credit card consolidation loans can be massive. If you fall behind on your loan or become unable to make your payments at all, you run the risk of a credit-damaging default.

Once you default on your loan, your credit score will drop precipitously. In turn, this will make it difficult for you to take out another loan. Even if you can find a lender that's willing to approve your application, your new loan would probably carry a far higher interest rate than your original credit facility.

Before you take out a debt consolidation loan, you'll want to consider all of the credit relief options available to you. Although you may be able to secure a loan with a poor credit score, there are certain risks associated with this course of action. In the end, you're the only person who's capable of determining how best to tackle your unsecured debt burden.

by Lacie Kehm

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4 Reasons Why Debt Consolidation Will Not Work

4 Reasons Why Debt Consolidation Will Not WorkThere are pessimistic people that will quickly point out that debt consolidation will not work and you would be better off sticking to your regular payments. They would rant off about how ineffective the program is and that it did not really help them out. Their debt situation is still the same and for others, even worse than when they started the program.

It might sound like a black propaganda from the point of view of consumers who benefited from the program. For those that are still considering the repayment tool, it could be enough for them to start looking somewhere else. However, there is some truth to why debt consolidation would not work for some people.

It is important to take note of your current financial situation as well when considering debt consolidation. It can help you understand if the program is a right fit for you or not. That being said, here are a few of the reasons why

If your income cannot cover existing debt payments

A debt consolidation program basically combines all, if not most of your debt payments under one account. What you get out of the program at the beginning is convenience. Rather than spreading yourself out too thin attending to different debt payment accounts, you get to focus on just one payment account.

However, if you are already having a hard time meeting your payments simply because you are not earning enough, it might not be the program for you. Debt consolidation will not work if you are trying to lower down your payment to make ends meet. Yes, it is possible to lower down your payment with it but it might not be enough.

What you need to look out for is increasing your income or looking for ways to lower down your expenses. You can try to monetize your hobby or take on a second job. Why not ditch the cable as well and just stream the movies you want to watch? You can also bike to and from your place of work to save on gas.

If you have an impulsive buying behavior

Another instance where debt consolidation would have a hard time helping you is if you have an impulsive buying behavior. This is not an easy characteristic to deal with and addressing the issue can take some time. This is why debt consolidation will not work for you if you keep on accruing debt as fast as you pay them down.

The problem would start as soon as you consolidate your debts. If it is for your credit cards, you would be transferring your balances on one card. Once your other credit cards reflect zero balances, you might start to buy things left and right again. Sooner or later, you would find yourself back in debt in addition to your consolidated loan.

If you know for a fact that you have an impulsive buying behavior, you need to address that issue first. Look at what triggers your behavior and do something about it. If you have a weakness when it comes to online shopping, do not save your credit card information online to make it a little harder to quickly make a purchase. Try to control your emotions and stay away from temptations.

Debt consolidation will not work if you believe the program is a way to free up credit

Similar to the situation above, debt consolidation might be a challenge if your main objective is to free up credit. This begs the question why you want to do it in the first place. If you just want to start with a clean slate, you are better off paying your balances down. If you need to free up credit on some cards to be able to shop, then this is not a smart idea. Especially when you realize that American households carry an average of over $137,000 in debt according to USA Today.

You need to understand that once you consolidate your debts like in your credit cards, your balances does not go away. They are just on a different account. If you start charging purchases again on your cards, you are just putting yourself in bigger trouble. As you try and make payments on the consolidated loan, you will have to make payments on the new charges as well.

If you plan close old cards to resist buying temptation

You might want to cut up old credit cards because you want to curb your unnecessary spending. This is a noble goal but the end simply does not justify the means. Especially when you start talking about your credit score. Debt consolidation will not work if you have the wrong objectives in mind. It can even put you in a worse financial situation.

One of the bad side effects of cutting up and closing old credit cards is that you lose the payment history attached to it. This is one important factor credit reporting bureaus use in computing for your credit score. The longer payment history you have, the better it is for your score. One thing you can look into is to just keep them without having to close them. You can use the cards from time to time but remember to pay the whole amount once the statement comes in.

How debt consolidation can help your finances

Now that you have an idea why and how debt consolidation will not work for your finances, here are a few of the ways it can actually help you.

It gives you the chance to focus on other areas of your finances

Once you consolidate your debt, you essentially combine them into one account. Once that happens, you now have the chance to focus on other areas of your finances. Rather than losing all the time trying to monitor and send payments out to different lenders, you can now use that time to try and increase your income. You might have enough time now to earn off of your hobby or simply take on a second job.

It allows a lower monthly payment

This is one of the benefits of debt consolidation but it should not be your ultimate goal. As your monthly payment goes down every month, you can now extra funds into other accounts. Why not consider beefing up your reserve funds? The more you have in your emergency account, the better you can handle unexpected situations in life. You can add to your retirement fund so you can retire earlier.

It can give you a lower interest rate

If your credit score has improved over time, debt consolidation could yield a lower interest rate. This means that your payment for your consolidated loan can be lower without having to stretch the repayment period. This means you get to pay off your debt a lot sooner and you get to save money on interest payment as well.

There are instances when debt consolidation will not work for you especially when you have the wrong motives. It can put you in a more serious situation and getting out will be more challenging. Debt consolidation is one of the most useful repayment programs out there. You just have to make sure that you are doing it for the right reasons so you do not put your finances in more peril than it already is.

Why A Debt Consolidation Program Matters?

Why A Debt Consolidation Program Matters?A lot of people are unable to manage their debt payment that is why going into a debt consolidation program has become a popular option. Debt is already a constant in any household budget. As such, dealing with it is already a necessity nowadays. It is not enough that you pay the minimum on all your debt accounts.

This keeps you current but it also keeps you in a perpetual state of debt payment. Minimum payment gives lenders the chance to charge you multiple fees on your account. There will be times where you end up paying a lot more on interest and fees rather than your original principal amount. As your payment progresses, you only get to pay a small portion of the original borrowed amount.

This prolongs your payment and the more pay in interest as well. This is just one of the reasons why you need to make sure you manage your debt payments well. Borrowing money is not always the cause of your financial problems. There are times when the repayment that follows afterward is to blame. This is why getting into a debt consolidation program can be a great tool for getting your finances in order.

Here are a few things to look into when you want to consolidate your debts under one account.

It helps you manage your payment

Getting into a debt consolidation program can greatly help you manage your monthly payments. It can be a struggle to try and keep tabs on multiple account payments every month. What’s worse is that if you overlook one account, it can come back to haunt you. Your lender can start charging you interest as well as fees and other types of charges. Forbes shares that there are a number of fees associated with a credit card.

One other problem you potentially face when you are trying to keep up with your monthly payments is mixing one payment with another. It is highly unlikely that you have exactly the same amount to pay for two lenders. So what can happen is that you overpay one and underpay another. The problem is when you pay less than the minimum, you can be slapped with fees as well.

Consolidating your debts can help you address these payment issues. This is because once you combine most, if not all your payments under one account, you only have one set of details to keep in mind. Rather than stressing yourself about 5 or 10 different payments every month, your focus now will be on one payment date and one payment amount.

It gives you the chance to pay a lower amount

Going into a debt consolidation program also gives you the ability to send out lower payments every month. This can be a big deal if you are treading on a shoestring budget and every excess fund at the end of the month is a heaven sent. The chance to make lower payments every month can be the deal breaker.

This is one of the benefits of debt consolidation but you need to understand how it is able to do that. For one, you might have a better credit score compared to the time when you took out or incurred your debt obligations. This is because a higher score usually leads to a lower interest rate. The lower your interest rate is, the lower your overall payment could be.

Another reason why consolidating your debts can result in lower monthly payment is because you spread out your repayment period for a longer time. The longer you stretch it out, the smaller your payment can be. However, you need to understand that there is a downside to this. The longer it takes you to repay your debt, you end up paying a bigger interest over the course of the loan.

Debt consolidation program helps your credit score

Another advantage of consolidating financial obligations is that it benefits your credit score. Of course, the program itself is not the sole reason for this. It has a lot to do with the fact that you now have an easier time making payments. It should follow that you will be able to make regular payments on your account.

As this happens, your credit report would reflect the timely payment and help push your score upwards. This will then expose you to numerous advantages of having a high score. You need to remember that simply going into a consolidation program will not automatically increase your score. It is important to put in the work for your score to benefit.

How to go about it?

Enrolling in a debt consolidation program seems to be a great opportunity to set your finances straight. It might be a simple process for some but there is still a few things to consider before going into the program. Here are a few things to look into.

Assess your current finances

Debt consolidation works best if you are still able to meet your current payments. The struggle is trying to make sure that you do not miss out on anything. This is because of the sheer number of details you have to keep in mind. If you are unable to meet your payments because your income is not enough, you might need a different repayment program such as debt settlement.

Understand the program

Getting into a debt consolidation program is just the beginning. It is wonderful in the sense that you get to focus on fewer payment details than before. It drastically lowers down the chances that you would miss a payment or send a payment to another lender. However, you still need to put in a lot of work. You have to make sure that you are able to meet your payments every month.

You need to make arrangements so you do not forget to send out your payment. It would be an excellent idea if you can automate your payments every month. You no longer have to manually send out a payment to your lender every month. Of course, you still have to make sure that you have enough funds to cover that monthly payment. Otherwise, an overdraft can bring in its own set of fees and charges.

Look for a trusted partner

Going through a debt consolidation program can be quite a jarring experience especially if it is your first. You are trying to manage several debt obligations and might already be running behind. This leads to multiple penalties and charges on your account. On top of that, you have to consolidate your debts and you do not have an idea where to start.

This is where working with a trusted company comes in. Working with a debt consolidation company can greatly lower your stress level especially as you pursue this life-changing program. The challenge is looking for a trusted company you can work with. It is not enough that start talking to companies that a search gives you. You need to look at customer reviews, association with trusted organizations, or even with the way they talk about their fees.

Getting into a debt consolidation program can help you manage your payments giving you an easier time handling debt. You just need to remember that it is still just a tool you can use and it requires participation on your end. You need to understand the process, make sure it is right for you and even look for a trusted company to partner with to make the program work.

Effective Budgeting Tips For The Year

Effective Budgeting Tips For The YearThere are a number of effective budgeting tips that can help you manage your finances all throughout the year. It is a good idea to make use of these to help strengthen your financial position making it a lot easier to reach your short and long-term goals in life. There are a number of these tips and there could be times where the challenge lies in what is applicable to you.

You might be operating in the red and what you need at the moment is a way out. It is quite hard to look at budgeting tips when you are trying your best to simply make ends meet. However, you need to remember that this is the best time to get serious with budgeting, It can help you manage your finances better and even help you get out of debt. Especially as CNBC shared that credit card debt at the end of 2016 topped $1 trillion.

If you are doing pretty well and just need some direction so you do not go into unmanageable debt, it is a good idea to look into these effective budgeting tips for your finances. You might think that what you have is acceptable but their always room for improvement. You can always benefit from considering and applying some beneficial tips to make budgeting a lot manageable.

Whatever your status in life, there are ways to help you manage your budget better, here are some of them worth looking into.

Have a complete list

One of the effective budgeting tips you can use is making sure that you have a complete list. When it comes to your household budget, you need to make sure that you do not leave any item out. This goes for both your income and expense items. If you miss out on one item, it can have an adverse effect on your budget.

That being said, you need to make sure that you are able to list down all your expenses. You can start writing down all your big-ticket items such as your mortgage loan on the house, your car loan for your vehicles, and even your student loans. Next would be your recurring costs at home such as food and utilities.

It is crucial that you be able to list down all your expenses. If you miss out on one, it would give you a hard time managing your budget. You might be wondering why you have a lot of extra funds at the end of the month not knowing you are not able to pay one credit card bill. Next thing you know, you are already deep in debt.

Making adjustments is one of the effective budgeting tips

One of the characteristics of an effective household budget is the ability to make adjustments when needed. In order to do this, you need to have a total control over your budget. All the information in that document has to be accurate because your adjustments will rely on those numbers. You need to know how much extra funds you have exactly so you can make an extra payment on one credit card.

Once you are able to make sure that you have a tight budget, you can easily make adjustments on the go. Extra funds after you have paid for every expense and saved for important accounts can be put on specific accounts. It can make extra payments, strengthen your emergency fund, or even add to your retirement fund.

Learn from your past mistakes

One of the most effective budgeting tips you can ever come across is looking at the lessons you learned from past mistakes. No one is perfect and you will make errors in judgment as you go along. It simply means that you are human and mistakes will be part of life. The problem starts when you do not learn from them and keep on making the same ones over and over again.

If you already know that you become impulsive when you hear of bargain deals, it is best to stay away from them whether walking from home or even surfing online. If they are unavoidable, carry cash with your on your way home or delete saved credit card information in your gadgets. This makes purchasing items a lot harder giving you the chance to back out.

One way to figure out these mistakes or shortcomings is to make an audit of your finances. Take a look back and try to identify those times when you had to go through a challenging situation. Look at all the factors surrounding it and make sure it does not happen again. Learn from them and put safeguards in place to avoid a repeat of the same situation.

Prepare for the unexpected

One of the most helpful and effective budgeting tips you will ever come across is putting together your reserve funds. This account consists of your emergency fund as well as your rainy day fund. These two differ from the amount as well as the uses of each. Your rainy day fund is allocated for small and minor emergencies. On the other hand, your emergency fund is used for bigger emergencies such as those medical in nature and even job loss.

One of the benefits of preparing for the unexpected is that you get to keep your budget intact in case anything happens. If you suddenly realize that you need a new sink, you do not have to skip a credit card payment just for that. It allows you to address the problem and still be able to stick to your monthly payment obligations.

Having some reserve funds will also prevent you from having to borrow money just to address the problem. This is because if you suddenly find yourself with your back against the wall, you might bite the bullet and take out high-interest loans. This can be from loan sharks or even payday loans. Having some money saved up gives you the ability to function for months at a time with limited income. All while avoiding predatory lending.

Consistently look for ways to make improvements

The biggest room in the world is that of improvement and this can certainly apply to your finances. There will always be areas in your budgeting efforts that can benefit from improvements. It can be the way you pay your mortgage loan and how bi-weekly payments can help you pay it off much faster from the pay-off date.

You can also try and see how paying off your credit card debts in full every month can save you interest payment. This is when you start comparing it with simply being content in making the minimum payment every month. It saves you not only interest payment but other charges and fees that you lender start adding to your monthly minimum payments.

Another area you can carefully look into would be your discretionary expenses. Try to understand if there is a way to lower it down or make better use of it. Lowering it down can result in bigger debt payments. It is also possible that you use part of that amount to take up lessons or even learn a new skill you can use to earn more money.

There are a number of effective budgeting tips you can consider when you are trying to make financial improvements. You just have to know some of them and understand if they will be beneficial to your current situation.

How to Effectively Manage Financial Stress

How to Effectively Manage Financial StressIt is tough to try and manage financial stress at the start of the year. One reason for this is that it is not something you expect to be dealing with too early in the year. However, you need to understand that these types of things do not really have a timeline. In fact, it even seems to come when you least expect it.

There are a number of situations which can stress you out and you need to be alert so you are not caught off guard. Once it is there, it is crucial that you deal with it at the soonest possible time. Putting it off for another day might only make matters worse. Here are a few things to consider when you are dealing with financial stress.

Do not make hasty financial decisions

One of the things you need to look out for is making knee-jerk reactions when faced with stressful situations. There are times when you just want t get out of a given situation, you are pressured into some questionable financial decisions. This is a catalyst for bigger and more complexed financial situations that can make problems a lot more challenging than they already are.

Take for example the cost of attendance when going to college or even for post-graduate studies. The fastest and easiest way to finance it would be to simply rely on student loans. It seems pretty straightforward where you just borrow money to pay for school. You just have to pay it all back when you start working.

However, there are a lot of ways to make student loans more manageable. There are scholarships to look into and even applying for work-study programs can help fund the expenses for school. When faced with stressful situations in life, you need to sit back and try to process the situation first before making any decisions.

Go back to basics to manage financial stress

When you start to feel overwhelmed with the financial situation that is in front of you, one other thing you can do is to go back to basics. This is helpful especially when you are trying to manage some complex financial problems. Trying to go back to basics can be a great tool to help you manage your finances.

One of the advantages of this is you get the chance to revisit your financial priorities. With this, you understand again why you do the things you do. If you are feeling stressed out with the amount you are setting aside for retirement, going back to basics would help remind you of your retirement objectives. Apart from your target amount, you would realize that all your efforts lead to an early retirement, plans of seeing other countries or even relocating to another lovely country.

Look for an outlet

In an effort to try and manage financial stress, one of the things a lot of people seem to do is looking for an outlet. Some think of this as a way to forget the problems they are facing but it actually does the opposite. They think that looking for an outlet gives them something else to do rather than solve their financial challenges.

In reality, looking for an outlet helps you clear your mind so you are able to manage your problems a lot better. Some people choose to exercise or even pick up running or biking as their outlet as shared by Very Well Mind. Other people choose to spend time with the hobbies they like. This helps clear your mind and puts you in a better position to handle stress.

Count your blessings

Trying to manage financial stress is quite tough especially when you are swamped with all the negative aspects of your problem. In fact, this is one of the prominent characteristics of being stressed out. You are constantly thinking about problems and how you cannot seem to do anything about it. Next thing you know, you are already running a cold sweat and losing sleep.

One way to deal with this is to try your best to count the positive things that have happened in your life. If you are worrying too much because you run up your card buying a new suit for your daughter’s wedding, just think of how happy she is. If you are worried too much that your business is not doing so good, focus on the fact that you were able to put up a business and that there could be better months ahead.

The thing with counting your blessing is that you get to have a reminder that life is not always a challenging journey. There will always be a good side to everything and you just have to choose to focus on it. This is not to say that you should forget about solving your problems and just be thankful that you are blessed. You still need to put in the work so you solve your financial problems.

Lower down your expenses

One of the most straightforward tactics you can do when you are trying to manage financial stress is to cut down costs. This is because most financial challenges tend to dwell with expenses overpowering your income. You might have a problem paying for a recent credit card expense because your budget is already stretched out.

Cutting down costs can help give you more elbow room with how you manage your budget. If you get to free up some funds every month, you could put that towards paying off that recent credit card expense. You can also start a college fund so you do not stress out about your child’s educational future. It is also possible that you can put in more into your retirement fund so you can start enjoying retirement earlier.

Change things you have control over

A big part of trying to manage financial stress is thinking about all those things that you need to change or control. You might stress out about how your retirement fund is not doing well because the interest is not what you expect. The business could also be starting to fold because you are unable to adapt to changes in your market.

In these situations, there are things that you can and cannot control. If the interest earnings in your retirement fund are not what you expect, you cannot change that interest amount. However, what you can do is put in more into your retirement so you earn more or simply look for other investment options. It would be tough to change the market to suit your business but what you can control is trying to make some changes so you remain relevant. Look at the items you have control over so you can manage your stress level.

Strengthen your emergency fund

One other thing you can do to manage financially related stress is to put in more into your reserve funds. This should cover not only your emergency fund but your rainy day fund as well. The stronger these funds are, the more you are able to address unexpected challenges. You have that cushion you need to help you keep afloat.

It is not easy to manage financial stress but there are ways to face them head on without losing your mind. You just need to think things through and keep in mind the tips mentioned in this article.

Everything That You Must Know about Debt Consolidation Loan Before Applying for It

Hardly anyone in today’s world can claim to have fulfilled all of their responsibilities and wishes without needing to borrow money from time to time. Times are hard, and at some point in our lives, we feel the need to take a loan to manage expenses on time efficiently. However, repaying the borrowed sum may sometimes be challenging.

If you have multiple loan repayments to think about, and if the constant payment reminders are stressing you out, you might want to consider availing a consolidation loan.

applying for debt consolidation loanWith proper debt consolidation, you can bid goodbye to the burden of making multiple payments each month. You would only need to pay once and on a monthly basis after consolidating all your loans into one. Restructuring all existing debts and combining them into one may even help to reduce the overall interest rate to some extent. This type of loan can relieve some stress, both financial and psychological, by helping you to put a check on other debts that may keep piling up otherwise.

What is a debt consolidation loan and how does it work?

Debt consolidation typically refers to the process of taking out a loan to pay off multiple others loans, liabilities, consumers debts and so on, which are usually unsecured ones. This new debt may be massive in size, but it also has more favorable payoff terms. It may even come with a low-interest rate or lower monthly payment, and sometimes, it may come with both. This type of loans can be useful in paying off student debts, credit card debts and other forms of financial obligations that one may accumulate over a considerable period.

In theory, debt consolidation is only the process of financing multiple loans, but it is noteworthy that there are specific instruments which creditors can offer the borrowers. Creditors willingly do this due to many reasons. One of the main reasons is that this type of loan significantly increases their chances of collecting from a debtor. It is also one of the main reasons that established and recognized financial organizations like banks and credit unions offer debt consolidation loans to those who face difficulty in managing their payoffs or the size of their outstanding debts. Due to this, debt consolidation companies have also become quite prevalent over time.

Which types of loans can you consolidate with debt consolidation?

There are quite a few types of loans that you may want to consider while consolidating your debt. Out of these, the most common ones are:

  • Home equity loans
  • Credit card balance transfers
  • Personal loans

Home equity loans: This loan is taken out by using the equity in your home as collateral. A fair amount of capital and good credit are the prerequisites for a home equity loan. Even though this financial arrangement puts your home on the line, it does come with typically low-interest rates. Down the path, if the payments become too much to bear, you can go with foreclosure on your home.

Credit card balance transfers: This service enables you to transfer your credit card balances, all of them, into a single credit card. It also comes with a low-interest rate. What is noteworthy here is that low balance transfer rates are mostly promotional rates, and in most cases, they expire after a period of six months. So, you must keep track of time and note when the typical transfer rates will start to apply. To use credit card balance transfer in a debt consolidation loan, you must first have a credit card with a credit limit that is big enough to hold all your credit card debt.

Personal loans: As per the experts at, personal loans are a popular choice for debt consolidation. However, you must first be able to get a loan that is large enough to cover all the balances you may have. A personal loan is an unsecured loan. It comes with the condition of fixed payments over a stipulated period. Upon approval, you may use your this credit to consolidate your debts.

What are the main benefits of debt consolidation loan?

Debt consolidation loan, if you qualify for it, can certainly put you in an advantageous position, and that too, financially, socially and psychologically. Take a look at the five main benefits of going with debt consolidation loan:

Single payment: As stated earlier, this type of loan enables you to combine all your debts into one. This way, you only need to make one payment each month. When the loan amount has been paid off, you would have successfully taken care of all your debts and would not have to worry about any consecutive payments.

Lower interest rate: You can save a significant amount of money as this type of loan comes with less interest, especially when compared to the astronomical interest rates on credit card loans. With debt consolidation loan, you can save money not only on monthly payments but also over the lifespan of the credit.

Good credit score: Inconsistent payments compromise your credit score severely. If you manage to get your debts consolidated and stay on top of the monthly payoff, you can work towards rebuilding your credit score steadily.

End to collection calls: Often the failure to make payments on time leads to the creditor handing over the collection duty to agencies. It means that your phones start ringing more often with collection calls. It increases both financial and societal pressure on you. With a debt consolidation loan, you can put an end to such harassments.

Stress reduction: Can you imagine the peace when you know that you do not have to worry about paying off multiple loans, and when you are not disturbed by creditors’ call now and then? All you have to do is arrange for just one payment, on time, each month.

One fact to remember while trying to consolidate your debts with a new loan is that this borrowed sum is not exactly helping you get rid of your debt. You will still have to pay your dues; you will have to plan your finances efficiently, and you will need to be careful about not borrowing more. However, having to pay just one stipulated amount every month might make you feel relaxed. You are just shuffling the debt around to find a more manageable way to pay it off. Practicing discipline and avoiding any new loans until you repay the entire consolidated debt amount would indeed be wise. Try to reduce your expenses so that the need to borrow anew does not arise. In case of difficulty, you can always consult a financial advisor.
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