There are many people trying their best to manage their debt on a day to day basis, but it can be an uphill battle to find the best solution to do so.
By using a personal loan to consolidate your debt, it could make paying off your debt easier. Here are some thoughts to consider before taking this leap.
1. A Personal Loan Can Make Debt More Manageable
Using a personal loan to consolidate your debt can help simplify your life by combining your debt into one, single monthly payment. It allows you to focus on one payment with one lender compared to having to deal with multiple lenders and pay each of them individually.
2. A Personal Loan May Help Save You Money
Although it may seem easier to use a personal loan to consolidate your debts, it’s important to calculate whether doing so will save you money overall. By using this tactic, it could reduce the amount of interest you’re paying and help clear your debt faster.
To help you figure out if this will help you save money, you will want to check whether you will have to pay any early repayment charge for clearing your original debts before the end of the term. If so, this may negate any savings you’d make by taking out a personal loan.
3. A Personal Loan is Flexible
You will also need to determine exactly how much you need to borrow (the total cost of your current debt and any early repayment charges) and decide whether you are likely to be able to borrow that amount and how long you will have to repay the amount you need to borrow. If you choose a longer loan term, your monthly repayments will most likely be lower, but you may pay more in interest.
4. A Personal Loan Depends on the Person
If you are close to settling your existing debts, a personal loan may be more costly than continuing your current payment process. In this case, a personal loan may not be right for you. It also may not be the right solution if you don’t think you’ll be able to afford your new single monthly repayment.
Otherwise, if consolidating your debt saves you money and makes it easier to manage, then you should consider taking steps to consolidate your debt with a personal loan.
Do you need help deciding whether consolidating your debts is right for you?
As we work together to get through these ever-changing times, let us know how we can help! We have personal loan options available to help you with your financial needs. Please 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. We are here to help you on your financial journey.