If you’ve racked up multiple credit card bills and you’re frustrated having to deal with various creditors and interest rates, you might consider looking at a debt consolidation loan to get back on the right financial track. But is consolidating your debts the ultimate solution for you? Here are ways to find out:
1. You’re willing to take on a new loan with a longer loan term
The very core of getting a debt consolidation loan is that you’ll take on a new loan and use this money to pay most, if not all, of your debts. You won’t have to deal with various creditors anymore, and pay the debt consolidation loan lender instead. With that said, you’ll have a new loan with possibly longer pay period. You may be able to enjoy a lower interest rate on your new loan, but it will take longer to pay it off entirely.
2. You have a great credit score
As with most lenders, those who debt consolidation loans typically look at a borrower’s credit score to determine eligibility. Having a high credit score gives you a better chance to lock down a lower interest rate. Still, you may qualify for debt consolidation loans even if you have a poor credit score, but you have to make sure that you’ll be able to manage this new loan to prevent your score from dipping down further.
3. You want to get ahead financially with only one loan to deal with
Debts can cause so much stress that some people find it hard to get ahead financially. If you feel like obligations are too much to handle and you want to deal with only one loan, one lender and one interest rate, then consolidating your debts presents a good solution.
Debt consolidation loans are not everyone’s cup of tea, but it’s a strategy that worked for people who are committed and disciplined enough in getting themselves out of debt.