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Debt Consolidation Using A Personal Loan

[Dec 11, 2009.]

 

Three Consolidation Loans

  • Home equity line of credit
  • Credit card
  • Personal loan

Banks have seriously cut back on originations of home equity loans. They have also cut over $1.5 trillion from available balances on credit cards. So where does one go for debt relief if two of the three easiest avenues are closed? Select option three, the personal loan.

Personal Loans Are Making A Come Back

Personal loans are old school loans. Before the days of credit cards and home equity loans, a personal loan was the obvious way to make a large purchase or consolidate debt. When credit cards and home equity loans became popular, personal loans fell by the wayside. Two years ago, if you asked your banker for a personal loan, he would likely have handed you a credit card application.

The lending environment has regressed since the Great Recession. Fast and easy is gone and conservative is back. You may find you have to provide a lot more paperwork to get a new loan. You may also need to look for a different source. Talk to a credit consolidation specialist to find a personal loan for your needs.

Eliminate Credit Card Debt With A Personal Loan

Most personal loans are installment loans. This means they have equal payments, a fixed interest rate and a fixed term. If you use a personal loan to pay off your credit card debt, you will know exactly how long it will take you get out of debt. You cannot be tempted to run up your balance on a persaonl loan like you can be with credit card debt. As long as you cut up the credit cards and close the accounts, you will find debt relief.

Don't Fall Into The Debt Trap

The worst thing that can happen is that you eliminate your credit card debt using a personal loan and then one year later find you've run up all your credit card balances again. If you find yourself with a nice debt consolidation loan AND a bunch of new credit card debt, you've fallen into the debt trap. Beware of this. Be disciplined. You don't want to ruin your credit and end up going bankrupt. If you really want to get out of debt, you will need to cut up those cards and stick to your debt relief plan.

 

About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.

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