Shed Your Extra Debt This New Year!

Do you have credit cards with balances that have snowballed from the holidays? Or loans that you had to obtain at a high interest rate (let’s be honest, everything feels like a high interest rate these days!) that are bogging you down every month? Do you feel like you are making payments that don’t seem to be lowering your balances at all? While there isn’t that one easy fix that makes all our debt disappear, a Debt Consolidation Loan does make it more bearable! Let me tell you more!

Debt Consolidation Loans combine your existing loans and/or credit card balances into one, potentially lower monthly payment! Sometimes you can cut back on how much you have to pay each month, and other times, you are able to pay off your debts in a shorter amount of time. Either way, you’re saving real money by consolidating your debt to this lower interest rate loan.

Debt Consolidation Loans have helped people save thousands of dollars in interest payments. And for those of you who have a hard time staying motivated, with debt consolidation loans you begin seeing your balances decrease each time you make a payment. That’s what I call motivation!

 

I talk with a lot of people throughout my day about how to better manage their finances and what type of loan funds they can qualify for, and this type of loan is one of my favorites to offer because of how it helps people get a hold of their financial situation again. Whether it’s me or another banker, walking through this process doesn’t have to be intimidating – that’s what I’m here for! To support our community as they make financial decisions to better themselves.

 

I typically start the conversation off with the basics. There are various avenues that can be explored when merging your debt into one payment. You’ll need to ask yourself:

 

How much do I need to borrow?
You will need to gather up all your previous monthly statements to calculate how much you will need to borrow to pay them all off. The goal is to transfer as many monthly payments as possible to the lower interest rate, debt consolidation loan.

 

What is my financial strength and how does it help or hurt me?
We all have a past, and it's important to understand how that will affect your loan terms. Your credit score, income, and existing debt payments will be considered and evaluated as the bank determines your ability to repay the loan. While it seems unfair to not lend someone the money just because the numbers don’t all add up, the last thing we want to do is put you in a position where you might default on a loan.

 

What collateral do I have to offer?
Collateral is a physical item that you own that the bank can take possession of if you are not making your payments as promised. Most frequently, this is a vehicle title or deed to your home. For smaller balances, you can usually obtain a consolidation loan without any collateral or with a vehicle. For larger balances, a home equity loan can be a great solution. The type of collateral used to secure your loan often directly impacts the type of interest rate you can receive and the process to receive the loan.

 

It’s a lot of information! I get it. I am a visual person, so below is a real life example to look at. Below shows you the savings if you were to make the exact same monthly payment on your current credit card balances as your future consolidation loan. As you can see, your monthly payment is the same, but you would have the loan paid off nearly 1 year (10 months!) sooner and you would save $4,461 in interest! Sounds like a no brainer to me!