Debt consolidation is one strategy for lightening your load and paying off debt. Debt consolidation means that your various debts, such as credit card bills or loan payments, are rolled into one monthly payment.
There are several options for consolidating debt. It’s a matter of finding which strategy is best for your situation. Taking out a personal loan is one option. Here are some factors and questions to consider when deciding if a personal loan is right for you:
Am I Eligible for a Personal Loan?
Before applying for a personal loan, review your credit report as eligibility for a personal loan is largely dependent on information provided on your credit report. You are allowed one free credit report from all three credit reporting agencies every year. Be sure to research lenders before applying for a personal loan.
A Personal Loan Can Give You a Lower Interest Rate
High-interest credit cards can quickly inflate balances. In addition to making it more convenient to make payments, consolidating debt can also lower your interest rate, which shouldn’t be underestimated. A lower interest rate may save you thousands in the long run depending on your loan terms.
How Long Will it Take to Pay off My Debt?
Do the math, and figure out how long it will take you to pay off your debt. If you consider your debt to be manageable, it might be better to hold off on securing a personal loan. If you’re currently making minimum payments, it may be difficult to figure out when you will be able to pay off the debt completely. Check out the Discover Debt Consolidation Calculator[ii] to take quick stock of your existing debts and how much money you could save if you were able to lower your interest rate with a personal loan.
Am I Ready to Consolidate Debt?
The time has come for you to take control of your finances. If you’re ready to truly commit to paying off debt, a personal loan is a strategic and effective way of getting back on track.
It’s important to gather all of the information available before deciding if a personal loan is the right step for your financial needs. If you’re just getting started, use Discover’s free Monthly Payment Calculator[iii] to estimate your potential monthly payments.