Debt Consolidation Could be a Good Reason for a Personal Loan

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If you are looking to begin the process of getting your debt under control, but are struggling with it being spread out in multiple areas, a personal loan could be the right path for you to simplify your financial situation.

What is a Personal Loan?

A personal loan is a type of unsecured credit that delivers a one-time payment of cash to borrowers. Then, borrowers pay back that amount plus interest in regular, monthly installments over the lifetime of the loan. Personal loans serve a variety of purposes, including debt consolidation which allows borrowers to pay off high-interest debts, such as credit cards.

Personal loans are commonly used to fund expensive events such as weddings, honeymoons, dream vacations, and unexpected medical expenses.

Once you’re approved for a personal loan, you typically will get the borrowed funds as a check or direct deposited to your checking account. The personal loan is then paid back in monthly payments within a predetermined time frame.

What is Debt Consolidation?

Debt consolidation is a personal loan that serves the purpose of combining other debts you have accumulated over time. If you decide to take out a loan for debt consolidation, you can figure out how much you need by summing up what you need to borrow to pay off one or more other debts.

These debts include credit card balances, unexpected medical bills, the outstanding balance on other personal loans, and more. By consolidating your debt, you combine your debts into one payment as a replacement for paying several separate monthly loan payments. You can read about the debt you can consolidate here.

Is Consolidating Debt with a Personal Loan Beneficial?

Consolidating your debt can be a beneficial path for debt management as it can make it easier to handle in the long run. Based on your personal situation, it may be better to consolidate some debts compared to others when it comes to personal, student, or business loans. You can speak with a Camino Member Advisor to help you determine which of these loans would be good for you to consolidate.

Managing multiple monthly payments can be a challenge. At Camino Federal Credit Union, we offer ways to consolidate your debt into one monthly payment. Give us a call at 800-835-3400 to speak with one of our Member Advisors, or visit us online at caminofcu.org for more information.