Debt consolidation loans for good credit

Do you want to know if a personal loan can help you reach your financial goals? Personal loans have a variety of purposes, whether you want to consolidate your debts, pay the debt you have on a credit card, make home repairs, cover the expenses of a family vacation, or simply pay a large expense or Unexpected in advance. Do you want to know the best? You can use personal loans for commercial purposes.

Advantages of personal Loans

Personal loans can make sense to you for a number of reasons:

  1. It is usually easier to qualify for a personal loan than for a commercial loan.
  2. There are fewer requirements in general and less paperwork involved.
  3. Many loans do not require a high credit score. However, if you have a solid credit, you will be able to receive better interest rates.
  4. There are a number of loan options available that do not require collateral or warranty: That means you don’t need to secure the loan by risking your personal property or your assets.
  5. Interest rates and monthly payment are usually fixed to help you plan your monthly expenses.
  6. The process of approving personal loans is much faster than in commercial loans.

That said, keep in mind that the maximum amount on most loans is about $9000 to $40.000, with a few lenders reaching larger amounts. However, if the limited amount fits your needs, a personal loan might be the best option for you.

How to consolidate credit card debt?

To begin talking about consolidation and debt refinancing, it is necessary to know that credit card debts are one of the most expensive credits. This assumes that you are paying a very high interest for the money you borrow.

It is always a good idea to apply for a personal loan and pay credit card debts and consumer credit. Since with a personal loan the interests that you are going to pay are always very inferior.

Through a consolidation you get a loan to settle your credit card accounts and you are responsible for paying a single loan. This strategy is not ideal for everyone, so you should be informed about the pros and cons of making the best decision.

Credit Card Debt Consolidation Benefits

Among the different benefits that debt consolidation presents we can find:

  • Have a single monthly fee that will allow you to organize better and know at all times how much you are going to have to pay per month.
  • Since, as noted above, credit card debts have very high interests, as they offer the consolidation of a personal loan or a mortgage loan or line of credit with a guarantee of a property, the interests you are going to Pay are much lower.
  • As a result of the interest rate reduction probably the monthly amount you pay is also smaller, which will make it easier for you to have no more defaults.
  • If you have not returned any receipts before negotiating credit card debt consolidation and you have a good credit history, it will be maintained with debt consolidation.

Drawbacks of credit card debt consolidation

However, not all are advantages, as there are also different drawbacks:

  • It is possible that the consolidated credit term is higher than the rest of the credits, so even if the interest rate goes down it may be the case that the total interest payment is higher.
  • On the other hand, in case of not satisfying all the expenses associated with the new consolidated credit at the time of hiring it, the amount of the debt will be increased with the direction of those expenses, to which the corresponding interests will be applied.
  • If all you do is transfer balances from another card, in order to group them, fees will also be increased for the transfer between cards.
  • In addition, it is not advisable to continue shopping with the same card that have moved the balances, because they will not apply a period of lack to new purchases, and these will begin to accrue more interest.
  • In the event that the consolidated credit has the form of a mortgage credit or a line of credit with the guarantee of your home, in case of default, could risk the latter. A circumstance that did not occur directly in the case of debts with personal loans or credit card debts.

The important thing is that if you decide to consolidate the debts of a credit card, this is a solution for your problem and not a temporary patch to find later with a bigger financial problem.

Many times a consolidation Remedis a symptom, but it does not solve a major financial problem. Before determining whether this strategy is right for you, explore the causes of your debt and value other repayment options such as a debt management program, self-pay strategies, or work directly with your creditors.