Posted: 1 Mar '21

Why a Debt Consolidation Loan May Be the Right Move for Your Financial Situation

Why a Debt Consolidation Loan May Be the Right Move for Your Financial Situation

A debt consolidation loan can be a lifesaver if you hold a lot of high interest rate debt with many different companies. It can save you money in the long run, simplify payments, help you pay off your debts faster, and lower your overall out of pocket monthly payments. There are several ways to secure a debt consolidation loan, let's have a look at loans and why people get them. Contact us to learn more.

Why Get a Debt Consolidation Loan? 

You may have recently moved, took on too many store cards, or had a series of emergencies where you have no choice but to ring up your credit card. There are many reasons why people look for debt consolidation loans. It is essential to take the reasoning out and look at the numbers. You want to figure out: 

  • Will a debt consolidation loan save me money? 
  • Will a debt consolidation loan give me peace of mind? 
  • Will a loan help with my monthly expenses? 
  • How will a loan benefit me over the long run? 

Ways to Get a Debt Consolidation Loan 


Home Equity

Using the equity in your home is one of the most favored ways to obtain a loan to pay off your debt. When you use your home equity, your credit score does not have to be as good as looking to take out a personal loan to pay off debts.  
With a home equity loan or a HELOC (home equity line of credit) you will be paying much lower interest rates than with a personal loan. In addition, using your home as collateral for the loan gives you extra bargaining power with your lender. 


Personal Loan 

You may not be able to take out a personal loan if your credit has already been ruined by the amount of high interest debt that you hold. If you qualify for a personal loan, make sure that you are getting a fair interest rate and time to pay off the loan from your lender. The best advice here is to do all that you can to not take out a paycheck loan. These have incredibly high interest rates and can easily cause complete financial ruin. 


Debt Repayment Program 

Using a debt repayment program will not look good on your credit report. Still, they can come in handy for people that do not qualify for loans and are completely overwhelmed with payments. In this situation, you may want to shop around to see where you can get the best payment program. These programs will negotiate with your creditors to bring balances down to bare minimums and have you pay that amount back through them. 

Make a Change 

There are many choices when it comes to a debt consolidation loan. No matter what you choose to do, make sure it's the right choice for your particular situation. If you are ready to work on a debt consolidation loan give BMC Mortgage & Investments a call.