6 Indicators That You Should Consider Debt Consolidation

Do you have debts that cause you to lose sleep at night? Many Americans do. Of households that have some ongoing credit card debt, in fact, the average amount is $9,333. No matter how your debt stacks up against this average, gain control over it for financial stability.

One of the best tools you have to manage and pay off all types of debt is consolidation. What is debt consolidation, and when is the best time to make use of it?

What Is Debt Consolidation?

With debt consolidation, you apply for and receive a loan for the amount you owe other creditors (such as credit cards, student loans, or car loans). Then, you pay off these debts with the consolidation loan. What you’re left with is one payment, usually at a lower rate, for a set period of time. Most consumers are then advised to close revolving debt accounts cleared with the loan proceeds.

When Is Debt Consolidation a Good Choice?

You can consolidate any amount of debt at any time if it’s financially or emotionally beneficial. A few indicators that now may be the time to use this tool exist. Here are six prime reasons.

  1. You can’t pay minimum amounts. Each debt has a minimum amount due in order to stay in good standing. With many revolving debts open, a person may find those minimum amounts add up to too much each month. Consolidation usually lowers the minimum due so you can manage.
  2. You need to simplify. Do you have trouble remembering to pay all your monthly payments simply because there are so many? Do they all fall on different days, which causes some to slip through the cracks? Consolidation takes all those different bills and combines them into one neat, manageable bill.
  3. You need to save for other things. If all your paychecks go toward paying debts, you probably can’t save for other needs. Many people thus find it nearly impossible to build stability. With debt consolidation, you can lower payments or stretch them over a longer period and free up money in your budget.
  4. Your interest rates are too high. Credit cards are notorious for high interest rates. If you’ve suffered late or missing payments, they usually get even higher. High interest rates mean your payments may largely end up going toward interest rather than paying down the balance. Consolidate that debt into one, lower-interest amount.
  5. You’re thinking about bankruptcy. Bankruptcy is a valuable tool, but it should not be the first choice for most people. Bankruptcy ruins your credit score, may be expensive, and may not even see your debts discharged. If you’re seriously considering this drastic step, consider consolidation first.
  6. You want to restore credit. Maxed-out credit cards and late payments do serious damage to your credit score. That can prevent you from qualifying for better interest rates, better offers, car loans, mortgages, or even certain jobs. With a consolidation loan, though, you clear off those high balances and avoid unnecessary black marks.

Do you fit into any of these situations? Whether your debt has become too much of a burden, you simply need to manage it, or you want to build your credit history, debt consolidation could be a good choice for you.

Where Should You Start?

Consumers have many choices when it comes to managing their debt. So make sure you choose a reputable lender that offers good rates and terms that are right for you. At Liberty Lending Group, we offer a variety of consolidation loans and options. Call today to learn more about how we can help you take control of your finances.

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