Here is something you have never known? A loan can help you loan a loan.
What do I mean? In simple terms, a loan can help you clear other loans. Well, let’s find out how.
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Why Work Before Getting a Loan
Before getting even 500 dollar loans, you must work to pay the loan. Working is one of the most satisfying factors in human life as it earns our living.
“Work is challenging, it’s engaging, it’s meaningful and if we are lucky, it might even be important,” says Barry Schwartz from TED Talks.
If you want to learn more about work, go learn Sigmund Freud’s philosophy of work. I would say that you need good judgment and an easy understanding of old languages to get something. But if you are the opposite of this, well, sorry to say, don’t read it. You’ll eventually sleep after reading half a page, huh!
What Are the Advantages of Working?
- You’ll get a regular paycheck to pay your expenses;
- Get the feeling of satisfaction and a sense of identity;
- Learn new skills;
- Avoid crimes due to boredom and poverty;
- Meet new people and understand the world better.
Disadvantages of Work
- Can be challenging especially if you have a project you have no idea about.
- Stress from employer’s demands and other employees especially if you are a leader.
- May lead to poor work-life balance.
All in all, working is important to earn a salary for a better living. But salary might not always be enough or present whenever we need it. That is where the loans come in.
The good thing about loans is that they are of various types and can be quick to get especially for online payday loans. To get payday money online you can always apply for 500 dollar loans and up to $5,000(!) and get the best lending option.
But what if you have several debts in hand waiting to be paid? What is the best way to deal with this case? This is where debt consolidation fits well.
Why People Apply for Personal Loans
So, why do people get into debt and live with it for a long time? Let’s discuss the reasons. According to Forbes, there are 5 the most common personal loan uses:
- Home improvement. And it is understandable. People want to live in a cozy house and make it comfortable.
- Medical bills. When you need money right now and it costs your health or even life, the fastest way is to apply for a loan online and solve medical issues.
- Debt consolidation. A lot of people apply for a simple personal loan to cover previous debts and repay the single debt in the future. But it is possible only if your debts are not high and can be covered with up to 5-10 thousand dollars.
- Car loans or car repair loans. Car is no longer a luxury, it is a way to earn money and to simplify your life. That is why people pay so much attention to cars.
Debt Consolidation
Debt consolidation is the process of combining multiple debts into a single larger debt and paying it off using a single monthly low-interest loan. Personal loans are best known for this purpose.
How Can Debt Consolidation Help to Easily Repay Other Loans?
- Simplifies the Loan Payment Process
Having multiple debts is stressful. You can even forget to pay some loans in time. Now imagine joining these debts and paying them using a single loan. This feels like some weights have been lifted from your shoulders, right?
You can now focus on one loan making the process more controllable and less stressful.
- Reduces Interest Rates
Several loans mean paying several interests. For unsecured loans, the interests are much higher than other loans. So, if you consolidate the loans with a single loan, you’ll clear all interest and remain with one to deal with.
If your credit score is higher, that is 700 and above, you are bound to get low interests ranging from 4% to 20%. If you have a low-valued credit score of 630 and below, your rates can be higher from 18% to 36%. The rates can get relatively lower if you secure the loan with collateral.
- Can Lead to Credit Score Improvement
Consolidating your loans can reduce your credit utilization ratio which in turn can improve your credit score. Your credit score will at first drop but later on improve as you continue paying the monthly amounts in time.
The credit utilization ratio is the total credit percentage currently usable. It is calculated by dividing the credit you presently owe by the credit limit.
A credit utilization ratio of 30% and below is considered good.
Conclusion
Debt consolidation is a great way to manage several loans. Before choosing any lender, do some research to get a lender with the best rates.
