$15,000 Debt Consolidation Loan

Consolidating one’s debt can provide financial relief and lower daily stress. When one owes many different creditors it can be difficult at times to meet all the monthly payment obligations.

On average, people start considering a debt consolidation loan when they owe around $15,000 in debt. While consolidating one’s debts can be helpful it is important to understand exactly what is a debt consolidation loan, who it can help, as well as the pros and cons that come along with it.

Go Directly To $15,000 Debt Consolidation Loan

Let us begin by answering these basic questions.

What Is A Debt Consolidation Loan

A Debt Consolidation Loan is a loan taken out by an individual who owes several creditors. The loan is used to pay all their outstanding debts, being left with one monthly payment instead of many.

Who Can Use A Consolidation Loan

A Consolidation Loan can be helpful to anyone who has many different creditors to pay monthly. The ability to have one payment instead of several affords the individual to get back their finances back on track.

Often, the loan can be set up to have an increased term than their other debts, allowing them to make smaller monthly payments than before.

What To Consider When Taking Out A Consolidation Loan With Bad Credit

It can be difficult to secure a consolidation loan with poor credit. The majority of lenders like to see a score of at least 620, and 580 likely being the lowest score that will allow an individual to secure a large consolidation loan.

An individual with poor credit looking to consolidate $15,000 of debt may find it easier to secure two smaller loans, as most creditors will be wary of lending large sums to individuals who possess poor credit. Applying for two separate loans for $7,500 will likely produce better results.

It is also very important to consider the term. How long will it take an individual to pay back their loan? If the term is too short, the monthly payments will be higher which may result is difficulty in meeting monthly payment obligations. If the term is too long, one ends up paying more in interest than they had to.

Finding the right term depends on several factors: how much one earns, their monthly expenses, and how aggressively they wish to pay off their debt.

The Pros And Cons Of A Consolidation Loan

Like all things in life, Consolidation Loans have their pros and cons. The most apparent pro of a consolidation loan is the ease of having only one payment to make at the end of the month instead of many. Many people find it easier to plan their month to month finances when they have one monthly payment that does not change. For those with sufficient credit, it is often possible to consolidate their loans at a lower interest rate than their other debts. Paying 10.6% interest on their consolidation loan is favorable to paying 19.99% on their credit card debts.

For those with poor credit, the interest rate is often the major con of consolidation loans. Those with poor credit may not end up being offered a lower interest rate. Even in this case, the consolidation loan may still be beneficial as the term can be increased, allowing the individual to pay less monthly.

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