Debt consolidation loans can save you money and reduce your debt, especially if you have bad credit. Lowering your interest rates will automatically save you cash every month. You can also plan how soon you want to pay off your debt with flexible loan schedules. The better rates you find, the more you can save.
Lower Credit Card Interest Rates Means Saving Money
Unsecured debt, such as credit cards, have the highest rates. The average credit card interest rate is 12.96%, but some accounts can be as high as 41%. Other forms of credit can also have high rates. But nearly all of these can be lowered.
Simply refinancing your debt for a lower rate can save you a sizable chuck of change. A $10,000 credit card balance with the average rate will cost you $3639.50 in interest over five years. Lower your rate to 9% and you will see a savings of $1184.45.
Flexible Payment Plans to Reduce Debt
Another benefit of consolidating your debt is that you have flexibility with your payment schedule. You can decide to extend payments to five, ten, even thirty years. Granted, the longer you take to repay your loan, the more you will pay in interest. But a lower monthly payment can help you get back on track financially.
One option is to take out a long term loan, but make extra payments on the principal. This way, you aren’t trapped by high monthly payments, but can still plan on quickly paying off your debt.
How to Find The Best Debt Consolidation Interest Rates?
To get the most out of debt consolidation, you need to find the best rates. Low rates can be secured with collateral. So, refi cash out can get you rates in the single digits. Personal loans are also an option, especially if you don’t own property.
Comparison shopping is a vital step in securing financing. Don’t get sucked in by claims of no fees or low interest rates. You want to look at the APR, which includes both fees and interest rates. That way you will get a true picture of the cost of the loan.
Online research is the quickest way to look up rates. You can go to a number of different broker sites to request quotes and then pick the best offer.
Here are our Recommended Bad Credit Debt Consolidation Companies Online.
Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.