with a FREE Debt Consultation
It starts with a debt consolidation loan. A debt consolidation loan is a special loan that is issued by a bank or other financial institution which pays off multiple outstanding accounts. This can result in a consumer having the ability to close old and historically problematic debt accounts, clear accounts that are over-drawn and over their limit, and resolve old debts that may be in negative standing or in collections. Closing adversely performing accounts can have a significant impact on your credit score which can help a consumer obtain financing for things like a home or auto loan.
A typical debt consolidation loan has a fixed interest rate and has a specifically fixed term, which means you pay the same rate for a set amount of months. Here’s a sample of how this works: Let’s say you have 3 credit cards with a total balance of $8,000, and APRs (interest rates) ranging from 15-26%, and you are going to pay off those accounts in 1 year, paying around $850 each month. Over the course of that year you could pay nearly $1,600 in just interest alone. However a debt consolidation loan of $8,000 at 10% APR would lower that monthly payment to around $650-$700, saving you nearly $1,200 over the course of that same year. Larger debt amounts can equate to larger discounts and debt reductions. To get a better idea of exactly how this would work for your debt situation, try using a credit card calculator, like the one found here.
