What is a Debt Consolidation Loan?
Published October 1, 2022
Over the past few years, consumer debt reached an all-time high. If you are one who has found yourself in more debt than usual, a debt consolidation loan might be for you. In this blog, we will discuss debt in the United States, what a debt consolidation loan is, why a debt consolidation loan is helpful, who should consider debt consolidation, personal loans at Neighborhood Credit Union, and more.
Debt in the United States
In the United States, debt is a big problem. According to a study done by Experian, the average amount of consumer debt per person is over $96,000. This is a huge issue because it means that American families are struggling to pay their bills.
There are several reasons for this prominent level of debt. One reason is the continued increase in the cost of living in the United States. A nationwide increase in housing cost, food cost, and more many Americans are struggling with saving money and establishing good saving habits.
Utilizing a debt consolidation loan can help you achieve lower monthly payments by bundling all your debts into one loan.
What is a debt consolidation loan and how does it work?
A debt consolidation loan is a personal loan that allows you to pay off multiple debts with a single, monthly payment. This type of loan can be used to pay off high-interest debt, such as credit card debt, medical debt, or other types of debt.
Debt consolidation loans typically have a lower interest rate than the interest rates on your individual debts. This means that you can save money on interest over the life of the loan. Debt consolidation loans also have a fixed interest rate, which means your monthly payment will not change over the life of the loan.
To qualify for a debt consolidation loan, you will need to have good credit and a steady income. You will also need to prove that you can afford the monthly payments. The amount of money you can borrow and the interest rate you will pay will depend on your credit score and income.
Why is a debt consolidation loan helpful?
There are several reasons why a debt consolidation loan can be helpful. First, it can help you save money on interest. When you consolidate your debt into one personal loan, you will likely qualify for a lower interest rate than what you are currently paying on your debts.
Second, it can help simplify your finances by consolidating multiple payments into one. Instead of making multiple payments each month, you will only have to make one payment. This can help you stay organized and on top of your debt.
Third, it can help you pay off your debt faster. By consolidating your debt into one personal loan with a lower interest rate, you can pay off your debt sooner than if you continued to make multiple payments each month.
Who should consider debt consolidation?
If you are struggling to make multiple debt payments each month, or if you are paying high-interest rates on your debts, debt consolidation might be right for you. When considering debt consolidation, it is important to compare different offers to find the loan that best suits your needs. Be sure to consider the interest rate, term length, monthly payment, and fees associated with each loan before making a decision.
Personal Loans at Neighborhood Credit Union
At Neighborhood Credit Union, we want to offer solutions to your debt struggles. We offer personal loans that can help consolidate your debt, so you can pay your debt off faster with only one monthly payment at a competitive rate. We have a variety of loan options to meet your needs.
To learn more about our personal loans, visit our website or call us today. We would be happy to help you find the right loan for your situation.
Rates Effective: February 24, 2025. Personal Loan: *Must be 18 or older and a member of Neighborhood Credit Union. Credit application and approval required. Minimum loan amount of $2,001 required. Lowest advertised rate dependent on excellent credit and reflects the maximum 0.35% rate discount. Lowest loan rate is available by qualifying for applicable discounts. Eligible discounts include enrolling in direct deposit and setting up automatic payments. Equal Opportunity Lender.
| Term | Rate |
|---|---|
| Unsecured Line of Credit | |
| Revolving | As low as 11.14% APR |
| Unsecured Personal Loans | |
| 36 months or less | As low as 7.14% APR |
| 37-60 months | As low as 9.24% APR |
| Overdraft Loan | Fixed rate of 18.00% APR |
| Projects Plus Home Loan | View Rates |
Conclusion
Outside of considering a debt consolidation loan, there are a few additional things you can do to lower your debt. First, try to live within your means. This means spending less than you earn and saving money each month. Second, use credit wisely. Only use credit when you need it and make sure you can afford the payments. Third, have an emergency fund. This will help you cover unexpected expenses without going into debt. Finally, stay disciplined with your finances. Make a budget and stick to it. If you're struggling with your debt, Neighborhood Credit Union is here to help and is more than happy to discussion your options.
Skyler has been a Marketing Content Specialist at Neighborhood Credit Union since 2019.
Who We Are
As an active part of the community for 94 years, Neighborhood Credit Union is a not-for-profit financial organization serving the state of Texas with branch locations in Collin, Dallas, Denton, Ellis, and Tarrant counties. With assets topping $1 billion, Neighborhood Credit Union has a continuously growing membership of over 60,000. For more information, call (214) 748-9393 or visit our homepage.
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