Consolidating your high-interest debt into a personal loan can provide some unexpected benefits. By getting a personal loan to consolidate your debt, you could simplify your monthly payments, save money on interest, and improve your credit score. Let’s explore these benefits in more detail.
AUTOMATE YOUR FINANCES
Debt consolidation loans are a popular way to simplify and automate debt repayments. You can avoid making payments to a number of different creditors and instead make one payment to a single entity if you consolidate your credit card and other unsecured debts into a single long-term loan. This experience is not only beneficial in terms of saving time and money, but it is also beneficial in terms of lowering stress.
LOWER YOUR INTEREST RATE
Interest rates are the single most important factor in deciding which loan to take out. If your credit score has increased since you applied for other loans, then consolidating will help lower overall interest paid on those debts and allow more money each month to go towards paying off what’s owed rather than keeping up with higher-interest charges from individual lenders.
The way I see it is this: even if someone only owes low-interest loans they may still be able save themselves some grief by taking advantage of opportunities like having all their debt tied together under one roof at an attractive rate, saving you possibly thousands of dollars.
IMPROVE YOUR CREDIT SCORE
Your credit score can temporarily decline as a result of applying for a new loan due to the hard credit investigation, but debt consolidation also has a variety of other benefits that can raise your rating. Paying off revolving credit, such as credit cards, for instance, can lower the credit usage rate that’s displayed on your credit report. Your usage rate should ideally be around 30%, which you can achieve by appropriately consolidating your debt. You can also raise your score over time by consistently making on-time payments and, eventually, repaying the debt.
Have you received a pre-approved offer code in the mail? Union First Funding can help you take advantage of those savings and get started on improving your finances today.