Are you in debt? You're not alone. According to a CNBC article, most Americans average around $90,460 in debt. Debt isn't always a bad thing though. For most people, borrowing money to finance a car, a home, or an education is a means to an end - a way to end up in a better financial situation in the long run.
However, sometimes debt can balloon out of control or become so expensive you can barely make the minimum payments on your loans. Not making loan payments or making late payments can lower your credit score, which can cause lasting financial repercussions.
What’s a possible course of action if you should find yourself struggling with multiple high-interest credit cards, student loans, car payments, and other debt? An option is to apply for a debt consolidation loan. These loans are personal loans that allow borrowers to combine two or more debts into one.
Read on to learn more about debt consolidation and whether it's right for you.
Debt consolidation loans are loans you have to apply for and then qualify for approval. They allow you to take multiple forms of debt and roll them up into one big payment. Depending on the interest rates you qualify for, this may be a great way to save on paying off loans of varying (sometimes high) interest rates.
Once you receive a debt consolidation loan, you pay off your existing debt. Then, you will repay this kind of personal loan in installments. These loans are typically at a fixed rate of interest and your monthly payments will remain the same for the life of the loan (although you can pay it off sooner if you like).
Check `n Go does not offer consolidation loans or is a debt consolidation company, but many lenders such as banks do offer debt consolidation loans.
There are quite a few potential benefits to loan debt consolidation, which may include boosting your credit score depending on various factors.
Even though there are a lot of positives to debt consolidation, unfortunately, there are also some downsides you should take into consideration when looking into loan debt consolidation.
Three ways to consolidate your debt:
Debt consolidation loans are the most popular way people consolidate their debt. All are personal loans offered by banks, installment loan lenders, and credit unions. These types of loans encompass all that has been discussed thus far.
Home equity loans allow you to borrow money against the equity in your home. You'd use this money to pay off your other creditors, then you would pay back the home equity loan.
Credit card balance transfers are offered by credit card companies themselves as a way to consolidate two or more credit card balances into one. They often offer lower interest rates on balance transfers as an incentive to get people to take advantage of balance transfers.
Yes, debt consolidation loans are deposited directly into your bank account. Once you receive the funds, it's up to you to pay off your credit card or other debts, and then repay the personal loan according to agreed-upon terms. Once the debt consolidation loan is paid in full, the line of credit is closed and you'll have no more access to it.
Like any other loan that must be repaid, debt consolidation may affect your credit score. By paying your monthly payment on time and for the correct amount, it's possible that your credit score will be raised or lowered depending on the actions you take during the loan. Missed payments or making less than the required monthly payment could result in your credit score going down.
To find a reputable lender for a personal loan, look to see if they belong to a national trade association such as the Online Lender Alliance (OLA). For example, Check `n Go’s website displays the OLA seal which lets customers know that Check `n Go is committed to the highest standards of conduct and full compliance with federal law and fraud protection.
For information on our installment loans, click here.*
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