9 Signs You Should Apply for a Debt Consolidation Loan

Whether you’ve got a lot of credit card debt or your student loans seem like they’ll never go away, debts put a lot of stress on your well-being. They loom over your finances, holding you back from moving forward with your life.

A big part of that equation is the interest and fees that accumulate on your loans. One way to reduce the additional costs is to apply for a debt consolidation loan.

This is a loan that you take out in order to eliminate the balances on your other debts. The entire sum of your previous loans is then combined into one loan with a single interest rate.

We’re going to take a look at some signs that this might be a good idea for you. Hopefully, the information below can give you some ideas on how to move forward with your finances.

You’re Just Paying Interest

A big concern for people with a lot of debt is that their monthly payments just cover the interest. You pay hundreds of dollars a month for a series of years and the principal balance on the loan doesn’t go down.

If you are covering any of the principal balance each month, it’s insignificant in comparison to the interest. This process keeps people locked into debt and makes lenders a lot of money.

The principal balance looms over your head and you’re stuck in a perpetual cycle of stress and debt. Sound familiar?

These situations don’t get any better unless the individual happens upon a large sum of money or gets a higher-paying job. You might not want to change your job, though, because you’d be doing well if it weren’t for the constant loan payments.

A debt consolidation loan with a lower interest rate than what you’re paying is a great solution to this problem. You’ll reduce interest costs and start cutting deeper into the principal balance in no time.

You’re Not Saving

Another big sign that your debts are outweighing you is the fact that you’re not saving.

We’re not all in the situation to save money on every paycheck. That said, it’s a huge relief to have enough money set aside to be able to pay your bills for a while if you lose your job or face an emergency.

Plus, saving is the most surefire way to set yourself up for retirement and offer yourself a little piece. If you realize that you would be saving money if you didn’t have debt, ask yourself if your interest payments are causing that.

When can you expect to be finished with the loans you currently have? Is that period of time too long for you to start saving for retirement on time? When you think in those terms, the reality becomes a little clearer.

Getting those loans organized into a single principal payment is one of the best ways to improve the situation.

Your Payments Would Be Smaller

When you consider that interest payments are smaller with debt consolidation, it makes sense that your entire payments could be smaller.

Getting loans like a Plenti Debt Consolidation Loan gives you the option to rework your payment situation. You might want to pay the same amount that you were paying before just to keep chipping away at your principal balance.

That said, you might be able to adjust things so that your payment is smaller and you have a little more left aside to start saving. Further, you might not need that option until a time when you’re tighter on funds.

Having the ability to reduce the loan payments every month frees up a little part of your mind that’s worried you won’t make them. Give yourself the option just in case you need it.

You’re Late On Bills

How is the state of your financial situation outside of your debts? Are you making your rent payments on time?

What about electric and other utilities? Sometimes, we pay our loan payments first because the punishments are stricter if we miss them. That said, we shouldn’t have to juggle between payments just to try to get the lightest punishment.

There are options for you to free up money and start feeling more confident that you’ll be able to make your payments. All of them. A debt consolidation loan gives you that ability and does so in a way that doesn’t pose any risks to you.

You Struggle to Manage Various Accounts

Another thing that adds to the environment of stress is the fact that our loans are scattered across the internet. You’ve got multiple accounts for a number of lenders, and all of them have a unique interface with which you pay your bills.

Add to that the fact that there are different processing fees, passwords, login information, and arbitrary factors that add up and make a difference. The entire thing can break you down and keep you in a state of anxiety about whether you forgot to pay a bill.

A consolidation loan streamlines that process so that you just have one place to go every month. There’s one day every month that you have to go in and pay that loan online.

There’s no scrambling across the internet to find the right websites, you won’t lose numerous passwords, and you’ll sleep a little easier. At worst, you have to recover your password from the same site every month!

Your Credit Score is Suffering

Are those late payments adding up and hurting your credit?

This is a big problem if you let it continue, and the issue might just be that your debts aren’t organized in the most efficient way. When they’re scattered, stuffed with interest, and difficult to remember, you run the risk of missing a lot of payments.

Making things easier on yourself and reducing the number of lines of credit you’re working with can reduce the risk of hurting your credit. If you just have one line of credit, you only have one payment to think about. That payment will help your credit improve if you make it on time.

The alternative is having significant damage to your credit if you miss more than one payment on any given month.

Your Financial Situation is Stagnant

How long have you been paying your interest fees?

Have you been stuck in a similar financial situation for a long period of time? Are there any routes out of this situation? If not, it’s time to start thinking about how you’re going to change things to create a more stable debt situation for yourself.

Many people don’t know that it’s possible to shift the way their debts are structured. Doing so can free up a lot of money, peace of mind, and savings for yourself.

Your Finances Have Improved

Has your situation changed a little bit since you took out the loans?

If so, you might be able to consolidate the debt and get a much better interest rate than you did right off the bat. The more able you are to pay back your loans, the more “creditworthy” you are.

The more creditworthy, the better the interest rate you get. This happens because you’re a lower risk to the lender. They can be confident that they’ll get their money, so they don’t compensate with higher rates.

You might be able to consolidate your debts with a lender that reduces your interest payments if your finances have improved in recent years.

You’re Ready to Move On

As unfortunate as it may be, a lot of debt keeps a person from moving forward with their life. If you think it’s time to make a leap forward, it might be time to consolidate your debt at a much better rate.

The process isn’t too hard, and it can shift your outlook on money and life in a short amount of time. Doing so can help you move into the next chapter of your life and get out of the perpetual cycle of stress and anxiety that debt entails.

You might find that you’re happier and more efficient when you lift the burden of intense debt. Freeing yourself up in that way might just allow you to think a little clearer. Who knows, that might allow you to make a little more money.

The idea is to throw a wrench in the negative, self-perpetuating cycle and move into the positive cycle that you’re capable of finding.

Want to Learn More About Getting a Debt Consolidation Loan?

A debt consolidation loan might be the thing you need to move forward. That said, there’s a lot to understand about the process and different options to explore before you make a decision.

We’re here to help. Explore our site for more insight into the lending process, to learn more about rates, and to find ways to improve your financial situation.