Northern Rock Article
Save Money and Get out of Debt Faster with a Personal Loan
In today’s society, many people are over-extended, and can barely afford to make the minimum monthly payments on their homes, cars, and credit cards, and then still be able to afford groceries and utilities. If you find yourself in this position, you might benefit from a personal loan. If you qualify for a personal loan, it is possible to payoff all of those credit card debts, or at least a large portion of them, and then only have to worry about making your personal loan payment, rather than ten or twelve different credit card payments every month.
You may even save money by going this route. If you are thinking about doing this, the first thing you should do is sit down with your recent credit card statements, and write down the balances, the interest rates, and the minimum monthly payments. You will then use these figures when you start looking for a personal loan lender, so that you can really tell if you are getting a better deal. Chances are, even if you have bad credit, you will save money each month, and will save a lot of money long-term, if you make certain that you get a decent interest rate on your personal loan.
Many people are reluctant to go this route, thinking that by taking out a personal loan, they are just going deeper into debt, but that really is not the case. If you take a personal loan, and use all of the money to pay off those high-interest, over the limit credit cards, and then don’t take anymore credit card offers, you would be surprised how much money you would save. There are many websites online that provide you with debt calculators, where you can enter in your current credit card balances and interest rates, and find out exactly how long it will take you to pay them off, and how much you will end up paying by the time you are finished. For many people, this is a major wake up call that they need to make some changes in their financial life. If you are having doubts, you should try this out for yourself.
You have to do your homework, if you really expect to get a good deal on a personal loan. Make certain that you know how much your current debt is going to cost you by the time all is said and done, so that you will be able to tell if the personal loan you are being approved for really will make a difference. If you have some credit dings, your interest rate may be so high that you won’t be better off, but this is rarely the case. If this does happen to you, you can look for other personal loans that might offer different terms, contact your lenders to talk about lowering rates, or enroll your accounts into a debt management program.
It is also important that you take a look at your budget, so that you know how much you can afford to pay each month towards your personal loan debt. If you are given monthly payments that are more than you had budgeted, you need to walk away. If you have to struggle to make your payments, chances are you will end up in default and will be no better off than you currently are right now.
Personal loans are a great way to get on the fast track to being out of debt, as long as you keep your wits and do your homework. Don’t make the mistake of paying off your existing cards, and then taking new ones, as you will be right back in the same boat. The idea is to wean yourself off of credit cards, and have the extra money you need, so that you don’t feel as though you need cards in the first place. If you have a hard time doing this, then you may want to seek credit counseling, which can help you learn why credit cards are bad, and help you learn how to better control your spending, so you don’t give in to the urge to go back into debt again.
