Does this seem like you have more debt than you can handle or these loans weighing you down and all the high interest rates causing you to feel like the burden of the world is upon your shoulders? Well, unfortunately this is the case for many Americans. It seems, however, that the lower your annual income, the more credit card debt on average Americans have. This is a troubling situation and it has an adverse impact on the future prospects for those with significant debt. So how can you reduce the pressure that you may be experiencing by consolidating your credit cards or loans into one loan?
Before answering this question, it is important to know that a typical consolidation loan will enable a consumer to make one payment using a credit product that has a lower average interest rate, thus making their monthly payments cheap. Therefore, consolidating all of your debt into one loan can save hundreds, if not thousands of dollars in interest payments alone.
There are to potentially effective ways of doing this. The first is a personal loan and the other is a balance transfer credit card. If you are thinking of consolidating your student loans, you may have other options. So, there are six things that you should do to reduce your overall costs by consolidating your debt.
First, make a list of all of your debt. Below this video we provided a link that will allow you to use our free tool to compile a list of all of your creditors. Once you have this list, it will be important for you to highlight the following, the amount due, your monthly payment, the interest rate on the loan, and whether the loan is secured or unsecured.
Second, check your credit history. By checking your credit history, you will be able to determine whether you will be able to actually get a loan to consolidate your debt. If you are not confident that you’ll get approved, you may want to use our credit score tool to identify errors, omissions, or other things that may have caused your credit score to go down.
Next, do research on consolidation loans. There are many lenders who offer loans that are designed to help consumers consolidate their debt. In fact, you may have to look no further than your mailbox. You can ask your bank or your credit union for a personal consolidation loan.
Fourth, identify your priorities. When determining what is most important for you when getting a consolidation loan, there are two things that you should consider. First, are you more interested in lowering your monthly payment? Or, second, are you more interested in lowering the total amount that you will ultimately have to pay?
Next, based on your priorities, you should apply for the loan. Contact the lender and provide whatever information and paperwork is required. As with applying for any type of credit, you will be required to provide a significant amount of information. So it may be best to start assembling it as soon as possible.
Next, if you are approved, you may want to consider paying off your smaller loans first. We have developed a debt stacker tool that can help you prioritize which debt to pay off first. Use this tool to help establish your priorities.
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