How To Pay Off Credit Card Debt Fast By Consolidation Loan

Important info about a great way to become debt free through consolidation

Debt Consolidation Loans:
pros, cons and where to get one

Consolidate Debt With a SMART Loan Take action right now to get the right consolidation loan. You can have offers coming in within minutes, but you must know certain things first. Click here to get it done

Debt becomes unmanageable because of three things:

1. high monthly payments
2. excessive interest over time
3. too many debts and too much confusion

Especially with credit cards, multiple debt robs you of your time and money. You don't need to be in financial trouble to consider a debt consolidation loan, since saving money is smart policy no matter what. Here is how it works.

How To Pay Off Credit Card Debt Fast With Consolidation

Consolidating means bringing various debts together. A debt consolidation loan is used to pay off all of the different debts immediately, replacing them with one loan arranged by debt consolidation lender. Then, that loan will have lower monthly payments and far better interest rates than credit cards. You only need to pay one bill a month, and no longer be harassed by three or four credit card companies or creditors.

But beware: The longer the loan, the higher the interest, even if the rate is lower. Read more here.

How much money can a debt consolidation loan save?

Lots. Credit card companies can charge interest rates from 12 to 19%. Credit card debt consolidation loans, on the other hand, are usually between five and 8%. For example, a $13,000 debt, over five years, can cost $5000 more in interest if not consolidated!

Who is eligible for debt consolidation loans?

There are four main requirements to be eligible for debt consolidation loans. Let's look at each one:

1. Financial stability means that the lending institution can have confidence you will be able to meet the new, lower, monthly payments.
2. Proof of income achieves the same goal, giving them the confidence to accept you into a consolidation program.
3. Credit score and history. As with any loan, the banks want to see a reasonable credit score. The better the score, the lower the interest rate on debt consolidation loans.
4. Equity or collateral. Being able to put up a home or other asset as collateral will make the consolidation loan a secured loan. Interest rates for secured loans are always better, as the bank has more confidence it will get its money back.

What are the advantages of a debt consolidation loan?

• Simplify the process by only needing to make one payment a month
• Potentially save lots of money by a far better interest rate
• Preserve credit score by paying off debts
• Lower monthly payment requirements

And what are the disadvantages of a debt consolidation loan?

• If it is secured, there is risk to your home or car should you fail to make the payments
• A false sense of complacency leading to increasing debt again
• In some cases, the interest rates are not significantly better

What should you look out for when you are taking out a consolidation loan?

It is important to know exactly how much this will cost. Sometimes, the interest rates that they can offer are not that much better than the combined average rates you are paying now.

Further, if they offer you a very low monthly payment, beware. Lower payments often mean that the term of the loan is longer. Even at a slightly lower interest rate, the longer the loan exists, the more interest you pay over time. Some consolidation loan offers can actually cost more than just paying off the credit cards directly.

Click here to run our Debt Planner - Credit Card Calculator and get a better idea about whether or not the consolidation loan offer is worth it.