What is a Debt Consolidation Loan?

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Millions of Americans today struggle with overwhelming debt. According to the U.S. Federal Reserve, consumer debt rose 3% last month, bringing the total amount of consumer debt to over $3.9 trillion (and growing). Particularly if you have experienced a financial hardship or unexpected financial setback, it can be difficult to get back on track and gain control of your debt. It can also be incredibly stressful and difficult to manage multiple debt payments while trying to get back on your feet.

Debt consolidation is a way to regain control of your finances and get a handle on your debt. A debt consolidation loan is given by a bank, credit union, or financing organization in order to consolidate all of your debt into one easy-to-manage payment.

What is Debt Consolidation?

Everyone’s financial situation is different, which is why it is so important to have a debt consolidation strategy that is tailored to your specific needs and financial goals. The most common types of debt are credit card, student loans, and medical debt. These are categorized as unsecured, which means the debt that is not backed by any asset or collateral. Secured debt, however, is backed by assets, such as a home or car, in case of nonpayment.

Instead of making multiple credit card payments every month a debt consolidation loan is used to pay off all unsecured debt and consolidate it into one monthly payment. Depending on your current debt situation, including the amount of debt and your credit score, you may qualify for this option.

Benefits To Consider

A debt consolidation loan can be a great debt relief option with many benefits, depending on your finances. One key benefit is being able to manage all of your debt under one account. This allows you to focus on just one payment each month, meaning you will worry less about missing payments. Debt consolidation gives you peace of mind knowing that all of your debt is covered, and you are working towards becoming debt free.

By far the biggest benefits of debt consolidation are having a lower interest rate and the overall potential savings. Refinancing all of your debt into a loan with a lower interest rate can save you money in the long run because, overall, you will pay more towards the principal and less towards interest. Having a lower interest rate also means that you will be able to pay off your loan faster. It is important to review your specific debt and the corresponding interest rates to determine what option is best for you.

Take Charge of Your Finances

You may be able to receive funding for a debt consolidation loan in as little as two days! Debt consolidation gives you the power to take charge of your debt and get back on track financially. Regardless of your individual debt situation, meeting with a debt specialist to review all of your options is the first step to getting back on track. Liberty Lending Group is a wealth of knowledge, so contact us to learn more about all your debt relief options.

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