I Reduced My Debts to Zero with One Loan

Surprisingly, it takes only one personal loan to consolidate all credit card debts into one with lower interest rate and get debt-free. At last!

Surprisingly, it takes only one personal loan to consolidate all credit card debts into one with a lower interest rate and get become debt-free. At last!

Let’s face it: dealing with debts is a stressful, expensive, and lengthy enterprise that eventually drains all your energy and can shatter your financial standing. This is why getting a tool that could effectively deal with this challenge might be a number one priority on your list while searching for a proper solution. The Consumer Financial Protection Bureau sees a debt consolidation loan as one of such solutions.

How do loans defeat debts? Well, it’s not a cheetah, since it usually takes the same amount of time to pay it off as you would need to liquidate each of the debts separately. But it’s certainly a strategic hunting method that allows an effective debt relief. Getting a personal loan to consolidate all your debts means to align all interest rates, payments, and terms into one predictable credit solution with fixed monthly payments and terms. In other words, you will know when exactly you will become debt-free.

Do you know how a debt consolidation loan works? Once you choose a lender, apply for a loan and get one, you already know how much you have to pay. You get a fixed interest rate, let’s say 10%, and the term of the loan life, let’s say 60 months. In exchange, your lender rakes in all your debts from your lenders and credit card companies and consolidates them into the one. What you  have to do now is to pay your new lender a fixed sum of money each month  to successfully redeem your financial stability and get debt-free in as soon as 5 years.

Let’s try to make you debt-free with this personal loan. Imagine you have 2 credit cards which carry balances: the 1st card with a 20% interest rate and $3,000 in balance and the 2nd card with a 21% interest rate and $2,000 in balance. To get rid of your both debts in 5 years, you will have to make regular monthly payments of $79 on the first card and $54 on the second card, so $133 in total. If you choose to consolidate your debts into one personal loan with a 10% interest rate for over 5 years, you will pay only $106 each month. You will save $27 every payment and $1,620 in total.

Top Providers of Personal Loans for Debt Consolidation. Consolidate some or all! It won’t hurt your credit score to apply for pre-qualification.

Why personal loans?

A personal loan for debt consolidation is not the only credit tool available on the market. Home equity loans and 0% -balance transfer credit cards also can help  to get debt-free. However, each of these alternatives have their own issues.

If you go for a home equity loan, you get into a riskier business. This loan, also called a “second mortgage”, is secured by your property. In other words, when you get a home equity loan, you put the house you live in into some sort of risk. If you don’t make it with payments and default on the loan, you may end up with serious penalties, and even risk to lose your house.
A 0% -balance transfer credit card is an excellent choice if you have a spotless credit history and can boast of the credit score close to 800 or more. Then you are likely to be approved for a card with a long balance transfer intro period, reaching up to 18 months. If you pay off the debt during this intro, it will cost you literally nothing (maybe except for a single one-time 3% balance transfer fee). If not, then the cost of your debt will boost significantly. After the intro period ends, the balance on this card will incur substantial interest at a rate close to 20%.

A debt consolidation personal loan may appear be the least risky and least expensive solution if paid off on time.