The benefit of having a debt consolidation loan is that you'll have all of your bills wrapped into one monthly bill at an affordable monthly payment. This is especially good for recent graduates who are still unemployed or whose starting salaries are less than what they owe on their student loans.
Multiple Credit Cards
For those who hold multiple credit cards and are in debt, they may choose to consolidate because it makes it easier to manage the debts. In some cases, it's more affordable to pay one monthly payment because some credit cards have higher balances than others.
Financial Hardships
In cases in which unemployment or health crises occur that affects income, some may choose to consolidate their debt to make the burden easier while they find ways to increase income. For example, an unemployed person may use a portion of his unemployment benefits to pay on a debt consolidation loan.
Helps With Personal Budgeting
Others choose debt consolidation because they feel it will reduce the stress of budgeting. For example, if a person has medical bills, credit card bills and student loans, he would have to budget for each expense, but with a debt consolidation loan there will be just one expense instead.
Low Interest Rates
Some choose debt consolidation loans to get low interest rates on their debts. For example, if someone has high interest rates on different credit cards but struggles to make payments each month, a consolidation loan with a low interest rate can help.
Considerations
Before getting a debt consolidation loan, see if you can manage the debts yourself. You can do this by reviewing your credit reports and disputing errors, cutting back on extravagant purchases, paying down your credit cards and not using them except for emergencies, and not acquiring new debts.
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