High debt can be draining on your mind and spirit. If credit card debt is causing you to feel as if there is no way out, we have a recommendation for you: use a personal loan for debt consolidation.
In a study conducted during the first quarter of 2020, Bankrate discovered that 38% of people applying for a personal loan planned to use it for debt consolidation. It may seem daunting at first, but this method of paying off debt has its benefits and is the best way for paying off unsecured debt.
Are you unsure about how debt consolidation loans work? Below, we outline the reasons why debt consolidation loans help in the long-term.
Discover why this strategy is a helpful way to restructure your debt, help you pay what you owe, and can help you overcome debt once and for all.
What is Unsecured Debt?
Before we jump into debt consolidation loans and its benefits, you should understand the type of debt that falls under unsecured debt. This form of debt is based on the borrower’s credit and their ability to pay off debt. It is not tied to collateral, such as a home or car, that can be taken away if a borrower defaults on payments.
Examples of unsecured debt are:
- Credit card debt
- Medical bills
- Student loans
What is a Debt Consolidation Loan?
A debt consolidation loan is a loan you use to pay off consumer debt, mainly unsecured debt. All unsecured debt is combined into a single, larger sum that you, as the borrower, agree to pay off to a lender within the terms of your loan. Debt consolidation loans have fixed payments, so you pay the same amount each month with the same interest rate. Typically, consolidating your debt into one account can lower the interest rate of your loan when compared to interest rates on credit cards.
What Are the Benefits?
This strategy for debt repayment has its advantages. When you agree to the terms of your loan, you understand exactly how much you will pay. As long as you live within your means, a debt consolidation loan can be the answer to help you pay off debt and even manage to save money in the long-term. With reasonable spending habits and regular, on-time payments you can improve your borrower profile and your credit score. Additionally, if you budget your income, you can even pay off what you owe early!
If you feel you have nowhere to turn to for debt relief, check your options with Lendah for a debt consolidation loan. It won’t impact your credit score and you can save money while paying off debt. If you have questions about debt consolidation loans, speak to the compassionate loan matchmakers at Lendah.
Our expert loan professionals will find the best terms tailored to your unique situation with fast approval and rates starting as low as 3.84% for amounts up to $100,000.
Get started today on our website. Prefer to talk in person? Call us at 833-453-6324 and we’ll get you connected immediately with one of our loan experts.