4 Important Benefits of Debt Consolidation You Need to Know

There are several benefits of debt consolidation that are worth knowing. If you would like to learn more about this type of debt relief, you should click here.

If you’re like most Americans, you have the following loans:

  • Student loan
  • Auto loan
  • Personal loan
  • Credit cards.

All these credit facilities are useful. A student loan funds your college education, an auto loan secures you a car, and credit cards, well, who doesn’t shop using a credit card?

Everything can be all rosy until it’s time to repay these loans. You’ll find that you have multiple lenders to deal with.

This is where debt consolidation comes in.

Did you know you can consolidate all or most of your loans into one loan?

Continue reading to learn the benefits of debt consolidation.

1. You Get a Lower Interest Rate

A high interest rate can make repaying an existing loan difficult. If it’s a fixed-rate, there’s little else you can do until you fully repay the loan.

Now, picture a scenario where you have multiple high-interest loans. If you aren’t making a good income, it’s easy to default on some of your loans.

With debt consolidation, though, you have a good chance of consolidating all your high-interest loans into one lower-interest loan. This means you’ll take out a consolidation loan from another lender and use the money to pay off your other loans. The new lender should give you an interest rate that’s lower than the weighted average of all the consolidated loans.

A lower interest rate on the consolidation loan will save you money. It’s more like getting debt relief.

2. You Get to Deal with One Lender

When you have multiple loans, you have to deal with multiple lenders. Even if you’re in a position to repay them comfortably, it can be hectic making payments to multiple lenders, possibly on different dates of the month.

Wouldn’t it be nice if one lender assumed all your loans?

Well, that’s possible. Just take out a debt consolidation loan and you will have one lender to worry about. No more juggling between multiple interest rates and repayment amounts!

3. No More Missed Payments

With multiple debts, it’s easy to miss a payment. And no, you won’t miss it because you don’t have the money to pay for it. You will miss it because you simply don’t remember anything about it!

As honest as your intentions to repay it might have been, a missed payment can lower your credit score. This will make it harder for you to get a loan at a good rate in the future.  

4. Get Out of Debt Sooner

A debt consolidation loan will often get you a cheaper rate. This means you’ll be able to save more money than you would if you were repaying the loans individually.

When you save more money, you have a better chance of getting out of debt sooner. You could use the savings to increase your minimum repayment, for instance.

The sooner you get out of debt, the sooner you’ll be able to achieve financial freedom!

Enjoy the Benefits of Debt Consolidation

Debt consolidation is an effective debt repayment strategy. As long as you can qualify for a consolidation loan, there’s nothing that’ll stand in your way. All that remains is for you to reap the benefits of debt consolidation.

Stay tuned to our blog for more personal debt tips and advice.

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