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Should I Use a Personal Loan To Pay Off Debt? Getting Rid Of High Interest Rate Loans & Credit Cards

Paying off debt is the first step toward a healthy financial life and a Personal Loan may help you take that first step to becoming financially free.

Let’s face it. Debt happens. It stinks, but it’s a part of life.

The Pros

  • With a debt consolidation loan, you can use it to pay off your other debts, such as medical bills or balances on high-interest credit cards. You’ll pay fixed, monthly installments for a set time period.
  • If you’re having difficulty keeping up with multiple payments from multiple lenders this may be a strategy worth considering if you want to lower rates, save money, or lower your monthly payments.
  • Additionally, a personal loan may improve your credit score by moving credit card debt over to the installment loan. A borrower that uses the majority of their available credit on their card will see a lowered credit score.
  • But borrowers beware…

A personal loan to consolidate debt only makes sense if you receive a lower interest rate than you have on your existing debt or if it helps you pay off your debt faster.

Not all Personal Loans are Created Equal

  • Some lenders carry fees called origination fees for their Personal Loan (we do not).
  • Many online lenders charge an origination fee on a loan. The fee, usually from 1% to 6% of the loan amount, depends on your credit profile. This fee is
    embedded into the annual percentage rate (APR) that you receive when you qualify for a loan.
  • Lastly, the best rates for personal loans will go to those with impeccable credit. If you have a limited credit history or a poor credit score, expect to receive higher rates than what is advertised.

If you’re already in the hole, each and every cent matters. Please remember we are here to help. The last thing we want is to see you face a negative financial situation that you cannot get out of… When in doubt, please see or call us. Our loan officers will be happy to look at your financial situation to see if we can help you improve your life.