How Can a Debt Consolidation Loan Save You from The Grasp of an Army of Credit Card Payments and Loans?

Taking control of your debts is not just a dream. Debt consolidation allows you to manage your multiple loan payments. The usual problem that most US citizens face is the endless number of payments throughout the month. The sums of these payoffs are of different sizes, and the loans bear varying interests. That often leads to more than one missed payment deadline and penalties. Not only do multiple payoffs make it extremely difficult to manage your finances, but they also make it hard for you to track the due dates.

What makes debt consolidation a comprehensive option?

save money with debt consolidation loanDebt consolidation might not be the ideal option for everyone out there, but if you identify with the situation we described above, it is the right option for you. Moving all or a majority of your monthly payments for unsecured loans onto a single line of credit reduces the number of payoffs to one. That is the main USP of a debt consolidation loan. To find out more, check out So, unless you are sure that you can restrict the number of your unsecured loans to their present count and can make the single payment per month, there is little use of consolidating your debts.

  • Debt consolidation is not a shortcut or a long-term solution. It can take a while to find a company that meets all your requirements. The service provider should be ready to consolidate your unsecured loans, bill payments and lines of credit from store payments. So, here’s what you need to do –
  • Do your research and find a company that offers reasonable rates. The total sum that you are paying right now should be higher than the rates the company is offering you.
  • Check your FICO score and the qualifying credit score criteria for the company/companies of your choice.
  • Check how many payments you can collate. Sometimes, combining all credit card payments, unsecured loan payments and medical bill payments is more profitable than only consolidating lines of credit.
  • Find out about the company’s consultation and origination fee. You should count them as a part of the cost, and when you compare the current payments to your possible future payments, do not forget to include the cost of origination.

Yes. It does take quite a bit of work. So, you might wonder why you should consolidate your standing lines of credit after all. Honestly, debt consolidation and subsequent personal loans are lucrative to almost everyone who is tired of juggling multiple loans in many ways. Naturally, it is an efficient way to pay many lines of credit in the form of a personal unsecured loan.

Why should you opt for debt consolidation loans?

Here are more reasons why debt consolidation loans are so attractive –

You pay off multiple credit balances

We all know how sneaky and steep credit card interests can be. Even the 0% interest credit card that you are using right now to pay your dues is only a ticking time bomb. The rates will explode in 6 to 8 months. The cumulative rates of multiple credit lines can be quite high. Revolving debt is worse since it is more difficult to track and manage. People often end up paying way more than they deserve, and that has a substantial impact on your credit score too.

Mortgages, automobile loans, and student loans are the installment debt kind. There are fixed payments, and it is also possible to consolidate them into one payoff to just one creditor. In fact, once you combine the different lines of credit and your outstanding loans, you can achieve one manageable monthly payment.

You enjoy lower interest rates

Having a $15,000 credit card debt on a 17.99% interest rate can kill your finances. Let us figure out how – most people make minimum monthly payments on their credit cards. You will take 253 months to pay your dues to the credit card company, and you will pay a whopping $14,581 in interests. Now, that sounds ridiculous, but sadly, that is true.

Let’s say you have an offer to consolidate your debts in exchange for a personal loan with a 36-month repayment period. It comes with a 12.5% interest rate and a 15.742% APR. If you accept this offer, you will quickly pay your debt off in 3 years, and you will pay roughly about $3065 in total interests.

That is precisely how debt consolidation loans help people pay off their lines of credit, multiple unsecured loans, and several student loans at much lower interest rates. In the above scenario, by applying for the consolidation loan option, you can save over $11,500 in interests. Consolidation loans have the power to lower the interest rate for the debtors, although it sounds like you are merely taking out another credit on top of the ones you already have.

You enjoy manageable monthly payments

The one reason most people apply for consolidation loans is that they are paying too much per month. These loans can help to bring down the monthly payments since they offer you flexible repayment terms during the time of sanctioning. Choose a more extended period to lower the monthly payments, but remember that the longer you take, the more interest you have to pay as well.

Never set your goal at making the minimum payment. Instead, think about paying the maximum amount that your current budget and standard of living permits. Having a realistic spending plan and a monthly budget often helps people to understand how much monthly payment they can make to the consolidation loan company. So, get yourself into debt counseling and debt management to understand the reality of your financial situation. Do not make promises that you cannot keep. Not making payments can attract hefty penalties and even lawsuits from the company.

Debt consolidation loans are full of advantages, and they have the power to make life smooth sailing for you. Nonetheless, they are not the solution to your spending problem or your debt. They are a temporary relief, and you need to pay off the same amount in single installments and a flat rate to the consolidation loan company. Consolidation does not make your debts go away. They just unify the monthly payments.