Balancing your checkbook can be challenging while you’re paying off debt. Between various loans and credit cards, it’s not uncommon to have multiple debts to take care of at one time. 

The result? Determining which payments to make each month, potentially incurring late fees and penalties, then facing the same choices next month affecting your credit score and limiting your opportunities, making it harder to qualify for a debt consolidation loan in the future. This monthly routine can get exhausting. Unless it’s certain that something will change very soon, some reorganization is necessary.

But there are safe options out there for getting your finances in order. You may not be in a position to settle the entire debt at once, but there are ways to make the situation more manageable; you’ll just need to evaluate your circumstances carefully. 

There are several debt settlement options that may work for you; the right choice will depend on your specific situation. One potential solution is referred to as a “debt consolidation loan.”

What Is A Debt Consolidation Loan?

A debt consolidation loan is designed to combine all your current debt into one loan with one monthly payment on new repayment terms and help you take care of outstanding balances right away. Consolidating your debt can make it easier to pay it off.

You may be wondering whether a single lump sum payment each month is better than several smaller payments. Consider this: every debt you are currently paying off comes with its own terms and conditions. This means varying interest rates and different consequences for being late on your personal loan payments. With a debt consolidation loan you’re able to combine all of these smaller debts into one, with a single monthly payment, and one interest rate. It will help you to make monthly payments on time, pay off the full loan amount and sustain a good credit history.

By combining your debts into one, it’s much easier to keep track of how much you already paid and how much remains to pay off your debt. As a result, you are left with a more affordable monthly payment with a single, unchanging interest rate. Debt consolidation loans can help you save money. Of course, this only works if you find a good debt consolidation deal with lower annual percentage rate (APR) and clear terms of use.

If the interest rates are similar or higher than what you’re already dealing with, you wouldn’t be doing yourself a favor by taking out a consolidation loan to pay off your multiple debts.

What Is The Best Way To Consolidate Debt?

Debt consolidation loans have many advantages:

If you find the right arrangement, debt consolidation can lower your monthly payments and significantly reduce your overall expenses.

A debt consolidation loan may be an easier way to stay on top of your balance, and know what to expect at any given time.

Debts can add up quickly and become unmanageable. Consolidation allows for smaller, easier monthly payments instead.

Being consistent and regular with your payments will score you points with the bank, too. Over time, this will improve your credit score. Good credit score can help you to lend loans in the future, get better APR and loan terms.

Balance transfer loans have limits to which debts they can settle. Mortgages and student loans fall short of the eligible category, which isn’t the case with debt consolidation.

How To Stay Out Of Debt

As is the case with any other loan, debt consolidation loans shouldn’t be your first line of defense to settle debts. However, if you often miss payments, have multiple credit card debts you can’t repay, want to extend your loan term, have high interest rates, or otherwise can’t seem to make ends meet, debt consolidation could be a good idea.

Speaking to a professional is always smart, as they can break down any concerns you have, point you in the right direction, and keep you safe.

CreditNinja offers affordable debt consolidation and balance transfer loans that will help you get back on your feet in no time. If you are interested in consolidating debt, start your application today to be one step closer to a more secure financial future.

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