What is a debt consolidation loan?
A loan – a second mortgage, a home equity line of credit, or a personal loan – that has a lower interest rate than your current credit could be considered a debt consolidation loan if you are using it to pay off several bills, such as high-rate credit cards or other loans you may have.
Typical benefits you can gain from getting a debt consolidation loan are:
- Lower monthly payments
- Paying less overall, due to a lower interest rate
- Better credit score if loans are paid off in time
Who should get a debt consolidation loan?
If you have high-rate credit card debt or high-rate personal loans, a debt consolidation loan might be right for you.
A home equity loan is one type of loan you could use for debt consolidation. If you own your home, you may have equity built up, which means you can borrow money against your home. This type of loan is a secure loan, because it uses your home as collateral. Using collateral to get a loan earns you a lower rate than an unsecured loan.
You may not have collateral to secure a loan, but that doesn’t mean you can’t get a loan. An unsecured personal loan will have a higher interest rate than a secured loan, but it may still be a lower interest rate than your other credit/loans.
How do I know which loan is right for me?
There is plenty of information online, but finding good advice takes a lot of time. A credit union loan specialist can look at your financial situation and discuss what would work best for you. A quick phone call or visit to the credit union is all it takes. The loan specialist will take an application and run your credit to get the big picture, then determine what type of loan, interest rate and payment plan you would be eligible for. Our loan specialists are experts who will have your best interests in mind.
What if I’m already behind on my bills?
Now is the perfect time to call and talk to a Credit Union loan specialist. The sooner you discuss it, the sooner you can find out what it will take to turn your situation around. Our loan specialists will provide you with solutions that best fit your situation.