A personal loan can be used to buy expensive items, steady personal finance, and pay off high-interest credit card debts. When applying for a personal loan, it is critical to pay attention to particulars like the principal amount, loan terms, Annual Percentage Rates (APR), interest, and monthly payments. The APR is influenced by a variety of factors, including individual credit score, employment history, yearly income, and debt to income ratio. Most personal loans are unsecured lines of credit as such, having a good credit score and an approved cosigner is highly desirable.
In 2018,Market Watch reveals that Americans had debts amounting to $13 trillion. More people are turning to personal loans to ease the debt burden to pay off high-interest student loans, medical bills, credit card debts, and other bills. The top lenders in the market have a personal loan caveat set at $1,000 to $50,000. Based on this assessment, a personal loan may not be helpful if your existing debt is higher than the amount you’re seeking. Depending on the lender, you can have your loan request approved instantly; on the same day or after a few days. For prudent debt management, check your monthly payment and ensure the repayment terms are shorter.
Using a personal loan to pay off credit card debts
There are a couple of scenarios where a personal loan can be used to offset credit card debts. When you apply for a personal loan, you’re essentially rotating the loan to a different account. It will take more effort to pay off both loans and ensure your credit remains unblemished. If you have low or unfavorable credit scores, you need to work out ways to raise the scores to qualify for better APR when you decide to apply for a personal loan. According to Business Insider, here are four strategies to clear your credit card debts using a personal loan:
1. Evaluate your existing debts and interest rates
The journey to paying off credit card debt and ensuring a sustainable debt in future requires discipline. The first step is to list all the credit card debts as well as the balances, minimum monthly payments, and interest rate. From here, you need to calculate the minimal amount due each month and track the balances. This information is crucial when working on a debt payoff plan where a personal loan is needed to pay off an impending credit card debt.
2. Choose low rate balance transfer options
Paying a long-standing loan with another loan can be a tricky affair. To be on the safe side, you should only transfer loan funds to pay a low-interest rate, credit card debt, and loan. Following this rule of thumb will save you lots of money in the long term. The plan will work more effectively if you choose a lender that offers competitive personal loan. There are many online lenders and peer-to-peer lenders that fit this fine description. The other alternative is choosing a debt consolidation partner that offers a lower interest rate loan.
3. Pay up an old credit card using the proceeds of a new loan
Once your personal is processed and transferred to your bank, make every effort to pay the credit card debt in full. If the loan is not paid off, ensure a sizable down payment is made to stop the accumulation of new interest charges. This strategy will also help you pay off the debt quickly. Once done, keep the paid-up cards off circulation to prevent the temptation of overspending.
4. Create a debt-free schedule
Debt consolidation is a plausible strategy of paying off debts since it creates a single, manageable monthly loan payment. In terms of cost, a consolidated payment also attracts lower interest and is tied to a debt freedom date that signals completion. Once the debt is paid in totality, you may find yourself without any debt. However, if you have pending debts, be it student loan or car loan, start by paying the loans with high interest. Lastly, always ensure sound debt management to avoid falling into another debt cycle.
You can get the most satisfactory outcome on your credit card debt clearance by partnering with a reliable personal loan provider.Keel Associates are debt consolidation experts with a stellar record of success. Whether you have issues with personal loans, medical bills, or credit cards, the company will help you pay off or get your debt into sustainable levels in no time. All you need to stay debt-free is applying for a competitively valued, debt consolidation loan.
Besides streamlining debt repayment, the debt consolidation plan will improve your credit scores over the long term and keep your credit utilization ratios to the lowest possible levels. Many individuals and corporate clients have benefited from Keel’s revolutionary solutions and industry expertise. For posterity, you need to decide to conquer your debt burden once and for all.