Debt Consolidation Loans: How to Consolidate Debt
Getting a Loan to Consolidate Debt
Looking for a smart option to get out of your debt cycle and improve your cash flow?
If you are struggling to pay multiple credit bills with high interest rates, debt consolidation is the ideal financial solution.
What is debt consolidation?
Debt consolidation is a type of loan that allows you to clear your other smaller loans, bills or debts that you are making payments on currently.
This loan effectively brings multiple debts together into one single loan involving a monthly payment.
Since this financial solution brings multiple debts together and ‘consolidates’ them into one loan, it is called a debt consolidation loan.
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The loan typically has the lowest interest rate that makes it easy for you to pay off your debt while improving your cash flow.
As a result, it is possible to clear your debts faster, while paying less each month.
A debt consolidation loan is the right option if
- The interest rate is lower than the total interest of all the debts you are currently paying;
- The monthly payment of the debt consolidation loan is lesser than all debts put together.
Who can apply for debt consolidation loan?
You can apply for debt consolidation loan if you have multiple debts including:
- Credit cards;
- Gas cards;
- Public utility debts;
- Tax debt;
- Unsecured personal loans;
- Unsecured LOCs (lines of credit);
- Child support arrears.
Debt consolidation is also the right option for you if your credit scores are 650 or more.
If your credit score is more than 750, you will be eligible for the lowest interest rate possible.
Benefits of consolidating your debt into 1 loan:
- One monthly payment with no hassles of juggling and keeping track of multiple bills;
- Dramatically reduced interest that can help you pay back the principal amount faster;
- Automatic, timely payments to creditors helps avoid collection calls;
- A positive impact on your credit score with payments made in full;
- Improved budgeting and cash flow management as a result of lowered interest and consolidated payment.