Personal Loans – The Perfect Debt Consolidation Tool
Do you stress about your finances on a daily basis? You may have several credit cards to pay each month. If you have too many credit cards open, your credit score could be low, even if you are making those minimum payments each month. Along with having a poor credit score, it may be difficult for you to remember the due dates for each card, causing a whole lot of stress for you.
If you worry that you will be stuck in this vicious cycle of only making minimum payments each month, you may assume
that you will never overcome your credit card debt. However, you can consider consolidating your debt with a personal loan. There are lenders who provide these types of loans for the people who want to quickly get rid of their debt.
Before reading further, please check out the following Which? article which shines a spotlight on a type of loan which should be avoided wherever possible - http://www.which.co.uk/money/credit-cards-and-loans/guides/payday-loans/payday-loans-how-they-work/
Why Consolidate the Debt?
One reason most people consolidate their debt is because it makes the situation easier for them. If you receive a loan for the total amount of money you owe on all your credit cards, you can pay each of them off at once, which saves you a whole lot of money that would have otherwise gone to high interest rates. Instead of making tons of payments on different days of the month, you would only have to make one solid payment to the lender of your personal loan each month.
The total amount you pay on the loan each month may be much cheaper than the original amount you were spending on your credit card payments, even if you were only putting the minimum down on each one. Not only do you get to save, but you get to improve your credit score and reduce some of that financial stress you were dealing with.
For more on debt consolidation - https://en.wikipedia.org/wiki/Debt_consolidation
How Does the Application Process Work?
If you are interested in applying for a personal loan, the first step is to choose a lender. Once you have made that decision,
you will be prompted to complete an application. During the application, you may need to provide a few details about how much you would like to borrow and how much debt you have at the moment.
You may need to provide some details about your employment, along with your social security number too. Because you are supplying such sensitive information, it is crucial for you to choose a reliable and trustworthy lender before you fill out the application. Even if your credit is not the highest, most lenders will be willing to work with you, especially if the reason you are applying for the loan is to consolidate the debt that you have.
What Happens After an Approval?
If you have been approved for a personal loan, it may be deposited directly into your bank account. However, you must first agree to the repayment terms. You may have an option to choose how quickly you will pay everything back. For example, you could make monthly payments for a total of 12 months or you could make them for 24 months, but it all depends on how much you can afford to pay.
As soon as you have the money in your possession, simply use it on all of those credit cards. In fact, after paying them off, you may decide to get rid of most of them so you can avoid the temptation of using them all over again. Dealing with a bunch of debt is never easy for anyone, but personal loans are a great solution when you can no longer deal with the financial stress and would prefer to consolidate your debt.
For more information relating to affordable small loan options, please return to our homepage.
The following video also explores this in greater depth -
