If Your Goal is to Become Debt Free, Consider a Personal Loan.
The new year is around the corner, and you might be thinking about resolutions. With high inflation, increasing interest rates, and some financial experts predicting a recession, many Americans are resolving to pay off more debt. Less than are debt-free, according to Experian, which means many people could benefit by prioritizing debt repayment in the new year.
While borrowing to pay off more debt might seem counterintuitive, in some cases it’s the right move. Here’s how a personal loan could help you pay off more debt.
How can a personal loan help me pay off more debt?
If you have a lot of debt across multiple high-interest credit cards and/or loans, you’re likely spending a good portion of your payment on interest rather than your principal balance. All those payments that you’re budgeting for are doing little to help you become debt-free.
If you can get approved for a lower interest personal loan, you could consolidate those debts into one loan with one interest rate. Managing fewer debts can make it easier to pay down debt. A lower interest rate means you can put more money towards your balance and pay down debt faster. Taking out a personal loan could also mean a lower monthly payment than you were paying across all your credit cards and loans.
Is a personal loan right for me?
Consolidating your high-interest debt can be the right move if you can qualify for a personal loan at a lower rate and won’t extend your repayment date by too much. You can use your new loan to consolidate expensive debts like medical bills, car repairs, high-interest credit cards, payday loans, and so on.
If you have improved your credit score, taking out a personal loan can be beneficial because you could earn a better rate than when you initially applied for funding or credit.
You should shop around and compare personal loan rates to secure the best rate and terms. Not all lenders are created equal, so you should make sure to read Google Reviews, check for their OLA membership badge, and ensure their site is secured. Always read the terms of your loan agreement carefully before signing.
If your resolution is to pay off more debt, a personal loan could help if you can secure a lower interest rate. You can use a personal loan to pay off high interest debts and consolidate your debt under one loan with one monthly payment. Check your rate at Uprova.com today.