Are you having a hard time paying your bills every month? Does it feel like you will never get yourself out of debt? If you answered yes to these questions you are not alone in your plight.
Having too much debt is a common problem many people face. Whether it is from mounting medical bills or simply spending more than you should the bills can get out of control quickly.
But is there a way to save money and pay off debt faster? You may be able to do just that by getting a personal loan.
Decide Which Bills the Loan Will Pay Off
First, take a look at all of the debt you have by gathering information from the most current statements or invoices. Make a list including who you owe, how high the balances are, how much the payments are, and what the interest rates are.
This list should help you decide how much you want to try to get the loan for and which bills to include in it. In order to save money and pay off debt faster, you should try to include the debt with the highest rates of interest.
Why You Should Get a Personal Loan
Targeting the debt with the highest rate of interest will likely reduce the life of the loan in comparison to the length of time you would continue to pay on your high interest bills. Furthermore, you will know exactly how long you will be making payments until the loan is paid in full. This is not always the case with those other high interest accounts.
But consolidating has other benefits as well. Combing these bills into one loan will also save you money over time. One reason is because the rate of interest on the personal loan will likely be much lower than that of your high interest bills.
However, according to an article on Time.com, you should also consider whether or not you will need to make any additional purchases in the near future. For example, if you are planning to buy a car, paying down credit cards that are close to their credit limit could benefit you by positively affecting your credit score. In turn, this positive effect could get you a lower interest rate on your car loan.
How to Choose a Lender
In order to save money and pay off debt faster with a personal loan you must choose a lender.
One way to do this is to use the new startup, Loanable. The application process can be completed in only a few minutes online and it doesn’t cost anything.
Once submitted it will be reviewed. If a lender is found, the form will be sent to them to complete processing. After that the money will be placed in your account.
Obviously you could choose a lender yourself as well. Just make sure you ask for a disclosure of all associated fees so you do not have any unexpected bills come up later.
What to Do Next
The next step is to stick to a budget and not use your credit cards any more. If you do you run the risk of ending up back in debt up to your eyeballs with no way out. You don’t necessarily need to close the accounts, though, according to Experian.
But there are a few additional things you can do to pay off debt faster. You can make your personal loan payments every two weeks instead of just monthly. By using this method you will make one full monthly payment extra each year since there are 26 two week periods in a year instead of 24.
You don’t have to stay trapped in a cycle of never having enough money to cover all your bills. Clearly it is possible to save money and pay off debt faster with a personal loan.
Have you ever made the decision to consolidate debt and get a personal loan to cover it?
I have done a personal loan in the past. I used Lending Club and my interest rate was certainly better than a credit card. However, if I were to try to lower my consumer debt I might choose to use a HELOC. But for people without homes personal loans can certainly be a viable option.
My initial reaction to borrowing money to get out of debt is that it is crazy. I assume that I got into debt due to a lapse of judgement or self-control. In order to convince myself that I could use a credit card and pay it off at the end of the month — the way I think a credit card should be used, I would test myself. I would use the credit card responsibly and pay as much as possible, but make sure that the amount is more than the charges for that month PLUS the minimum payment. If I could not do that, I should NOT borrow money and continue to keep the credit card.
I assume there are good cases for borrowing money to consolidate debt, but it has to come with an increase in self-control or it will probably fail.
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