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How Can A Debt Consolidation Loan Really Help You

If you are feeling overwhelmed by your debt, bankruptcy is not the only option available. Instead, consider the benefits of a debt consolidation loan.
Debt has become a standard part of the American lifestyle. While carrying some debt is acceptable, if you’ve reached the point where you can barely afford to make the payments on your debt, then the time has come to make some changes. One of the most common changes is a debt consolidation loan. Here are some of the benefits of this type of loan.
Benefit #1 – Lower Monthly Payments
For starters, if you’ve done the math appropriately your debt consolidation loan could actually save you money. For one, you could end up paying less in interest which would mean a cash savings over the life of the debt. Plus, you’ll normally have a larger single payment instead of a whole bunch of smaller ones that end up equaling a hefty monthly bill.
Benefit #2 – Greater Convenience
If you have to keep track of dozens of different bills every month, that can be real challenge. If you miss a single payment by accident or mail one late, you could cause long-lasting damage to your credit score. By combining the debt into a single debt consolidation loan, you’ll make the load much easier to deal with and you’ll minimize the risks of forgetting to make a payment.
Benefit #3 – Faster Debt Repayment
Here’s an example of how a debt consolidation loan can help you pay off your debt faster. Let’s say you owe $500 to a credit card company which charges a significant interest rate. Although you pay the minimum monthly payment of $20, the balance only goes down by about $12 to $15 each month because of the interest. With debt consolidation loans, however, the interest rate will be lower and more of your payments will go towards the principal.
Benefit #4 – Better Choice than Bankruptcy
If you take action early enough, your debt consolidation loan can help save you from bankruptcy and from ruining your credit for more than a decade. Because the loan allows you to pay off these debts, you’ll no longer have negative reports being made on your credit report nor will you have to worry about garnishments being attached to your wages to pay off these debts. With your debts paid, you don’t have to worry about annoying creditors harassing you anymore.
Benefit #5 – Reduced Fees
As you may already know, credit card companies don’t play around when you are late on a payment. Some may let you slide on the first but don’t expect to be lucky a second or third time. Not only will you be charged a hefty late fee but your interest rate will automatically be jacked up. The transgression will also be reporting negatively to the credit bureaus. And sometimes this can happen even if your payment arrives a day late. If you’ve chosen a debt consolidation loan, however, you can wipe out that credit card debt and won’t have to worry about those problems. Of course, you’ll still need to make your payments on this loan in a timely fashion.