Important points
- Paying off debt can be difficult, especially if your loan has a high interest rate.
- A personal loan might help you minimize the cost of your debt and make it easier to repay.
6 ways to Compare bad credit personal loans
If you want to be debt-free by 2023 – or at least make a significant hole in your debt – you don’t have much time. And there is one possible adjustment you may make that would make paying down your balance much easier (depending on your situation). You might obtain a personal loan.
Borrowing more money when attempting to get out of debt may seem illogical. However, in some cases, it may be the best course of action. This is why.
How a personal loan may help you get out of debt faster
If your personal loan has a lower interest rate than the debt you are now trying to pay off, you may be able to pay off more of it by 2023.
If you have high-interest debt (such as credit cards), chances are that a large chunk of every payment you make is being eaten up by interest. Because your finance expenses are so expensive, you may only be able to pay down a small portion of the debt. So, all of those payments you work so hard to make to your creditors may be accomplishing very little to help you get closer to your goal of becoming debt-free.
If you qualify for a low-interest personal loan, you can convert a high-interest debt to a low-interest debt. Instead of spending 17% yearly interest on a credit card (or more), you may pay 8%, 10%, or whatever interest rate you qualify for on a personal loan. You then apply the revenues of your personal loan to pay down your high-interest credit card debt.
If you owe $4,000 on one credit card and $5,000 on another, a $9,000 personal loan may help you pay off both. You’d just have one debt to pay, and it’d be at a cheaper interest rate.
After you’ve cut your interest rate, a larger portion of your monthly payment should go toward actually decreasing your amount, allowing you to become debt-free sooner. This might help you make significant progress on your debt repayment techniques for the remainder of this year and into next. If you owe $4,000 on one credit card and $5,000 on another, a $9,000 personal loan may help you pay off both. You’d just have one debt to pay, and it’d be at a cheaper interest rate.
Is this the best decision for you?
If you can get a new low-rate personal loan, there’s no reason not to move forward with this strategy ASAP. You can use your new low interest personal loan not just to reduce the rate on credit cards, but on any kind of expensive debt you have, such as payday loans or medical debt. You can use your new low interest personal loan not just to reduce the rate on credit cards, but on any kind of expensive debt you have, such as payday loans or medical debt.
To see if this technique will work, look around and see what rate you may qualify for without harming your credit score. You’ll also want to ensure that you can comfortably afford the payments on your new personal loan, and that you’re living within your means so that you don’t end up charging more on your credit cards after you’ve paid them off.
If you can secure a new low-interest loan and trust yourself to be diligent with payments, there’s no reason not to use this method as soon as possible so you may pay off the greatest amount of your debt by 2023.