Debt Consolidation Loan

Debt consolidation loans are used to consolidate high interest debt, typically credit cards. Consolidating debt allows you to make payments to one loan instead of multiple different types of debt that you may have acquired. This can make paying off debt a much more simplified process with one stream lined payment plan. You could also get a lower interest rate and save time, money in the long term. To decide if debt consolidation is for you, consider your individual financial situation and determine what your goals are.

You can use a personal loan for any type of financial gain that you want. If you’re are thinking of using a personal loan for debt consolidation than here are some things that you should consider:

  •  Your credit score should be very good. Personal loans can be available to anyone regardless of credit score good or bad. The best way to get terms that are favorable with a low interest rate is to come in with an ideal credit score. You want to aim to have a FICO score of at least 670.
  • If you have high interest debt than this is another good indication this is a favorable option for you. If you can qualify for a lower rate than what you are paying now, consolidating your debt will help you save money in the long term with low interest charges
  • You have no repayment goals in mind. Credit cards are dangerous because they are what is known as revolving credit. This means that you borrow and pay off the funds in an ongoing basis. There’s no strict repayment plan in place. If you pay just the minimum credit amount every month than you could remain in debt forever. On the other hand, personal loans have a set repayment plan, this can be motivating if you plan on sticking with the agenda to pay off the debt.

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Sierra Pacific Mortgage NMLS# 1788. Michael Shotnik NMLS: 218281, CO License: 100017466. Not licensed in Alaska or New York.  To check license status of mortgage loan originator, visit D.O.R.A. and NMLS consumer access.