Have you heard the term “debt consolidation” tossed around? It sounds both intimidating and interesting. A way to simplify your debt and monthly payments? Perfect! But debt consolidation isn’t for everyone, especially if you don’t want to rush into something that isn’t right for your finances.
Luckily for you, we’ve outlined the basics of what a debt consolidation loan is, its pros and cons, and how to tell if it’s a good match for you. So, what’s the deal with debt consolidation? Read on to find out!
A debt consolidation loan can come in many forms, but the purpose of it remains the same: to streamline your finances by combining your various debts into a single loan. The consolidation process allows you to pay off multiple debts with one new loan or a balance transfer credit card. By consolidating, you won’t have to juggle multiple various payments and you can sometimes qualify for a lower interest rate on the new loan.
How you choose to consolidate is up to you and your lender. You might be able to find a specialized debt consolidation loan, but most people use credit card balance transfers or personal loans for debt consolidation. At Maple Federal Credit Union, we suggest using our personal loan to consolidate your debt or our Maple Visa to transfer your credit card balance from a high-rate card.
There are many pros and cons to think about when you consider a debt consolidation loan. Here are just a couple to consider:
Debt consolidation isn’t the right solution for everyone, but it can be a very powerful financial tool when used correctly. If you have various forms of debt that are high interest and frustrating to manage, a debt consolidation loan is worth looking into. If you have a credit score high enough to qualify for a lower interest rate on the new loan, a debt consolidation loan is well worth your time. Just make sure you have a plan to improve your financial habits at the same time!
Want an opinion on if a debt consolidation loan is right for you? Reach out to our team, and we’ll help you find the right solution for your unique financial situation, judgment-free.
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