If you have been searching for a better way to manage and reduce debt, you likely have come across the concept of debt consolidation. Through debt consolidation, you transfer debt from existing accounts to a new consolidation loan from a lender like Lance Advisors. By doing so, you may take advantage of beneficial financing terms, such as a lower interest rate and a fixed term. These unique features of a debt consolidation loan may establish lower monthly debt payments and help you to pay the loan balance off faster. However, debt consolidation is not ideal for all situations. These are some of the instances when you should consider consolidating debt to get your finances back on track.
When You Struggle to Make Minimum Payments
Many people who are burdened by high debt balances struggle to make minimum payments. The idea of paying more than the minimum required payment to reduce debt balances quickly may seem almost laughable in these situations. Refinancing your debt through a debt consolidation loan may yield dramatically lower payments. With lower payments, you may manage your budget better, live more comfortably and even free extra funds to make larger debt reduction payments.
When You Are Challenged by Managing Multiple Accounts
Making multiple credit card payments each month can be stressful. In addition to the financial stress associated with debt payments, you may struggle to remember to make all payments on time. Debt consolidation loans from Lance Advisors may be used to roll two or more debts into a single account. By eliminating unnecessary payments, you may avoid late fees and credit report dings related to forgotten payments.
When Your Interest Rates Are High
High interest rates are common with some types of debt, such as credit card accounts. The interest rate directly impacts the cost of the debt on a monthly basis. Because more of each payment is applied to interest charges rather than debt reduction, paying off the debt can be challenging on an account with a high interest rate. Reducing your interest rate through debt consolidation means that more of each payment is applied to principal debt reduction.
When You Are Ready to Work Toward Becoming Debt-Free
If you feel as though you are spinning your wheels with debt reduction efforts and as though your minimum monthly payments are barely making a dent in the account balance, you are in good company. Credit cards have a revolving term, which does not have a fixed repayment date and may take a decade or two to pay off. A debt consolidation loan has a fixed term, such as a term of five years. At the end of this 5- year period, all debt linked to the account will be paid in full. In this way, a debt consolidation loan with a fixed term establishes a firm repayment schedule and enables you to make quick progress toward debt reduction and ultimately full debt elimination.
If You Qualify for a Debt Consolidation Loan
A debt consolidation loan is only suitable for you if you qualify for financing. Each lender that offers debt consolidation loans has unique applicant requirements. These requirements may relate to documented income, credit scores and other factors. Because requirements vary, do not stress if you do not meet the lending requirements for the first consolidation loan that you come across. Keep in mind that you can always reposition yourself, such as by spending the next few months improving your credit scores, so that you can get approved for financing in the future.
A debt consolidation loan may be a smart way for you to regain control over your finances and to establish a solid debt reduction plan. You can see that consolidating debt is a great way to resolve many challenges that may be overwhelming you today. A smart way to determine with certainty if debt consolidation is right for you is to request a quote and to crunch numbers to explore specific pros and cons.
