April 14, 2022

How to Use Loans to Consolidate Debt

Use these strategies to reduce debt and improve credit.

How you can qualify

With the help of a debt consolidation loan, you can combine several high-interest debts into one low-interest loan. To do this, you will need to borrow the amount needed to pay off your debts and then repay it monthly. To secure a low interest rate, you will need a good credit score.

Taking out a loan

Before you commit to a loan, analyzing your budget to determine a realistic monthly payment will help you get the most out of your new loan. Debt consolidation is one of the top reasons that consumers take out personal loans, and Citizens First Bank has competitive rates on personal loans and local lenders who are ready to guide you through the process.

Alternatives to loans for debt consolidation

If your credit score does not qualify you for a low-interest loan, consider one of the many alternatives to help you become debt free. Debt management programs through a nonprofit credit counseling agency can help with budgeting and negotiating a lower interest rate with credit card companies. Balance transfer cards can also help you reduce interest rates by combining the balances of all your credit cards into a single account that is interest-free for a period of time.

Avoid debt in the future

With a debt consolidation loan in effect, a debt-free life is in your near future. By keeping your financial goals in mind with a budget and prioritizing your essential expenses, you can keep credit use in control and stay on the right track. Remember to avoid any suspicious lenders and stick to trusted institutions like your bank. Unfortunately, debt relief and collection scams are common, so remember to never send money to someone you don’t know.

For more loan resources visit your local Citizens First Bank in person or online. Our experienced team can help find the right strategy for you to become debt free.