If you’re struggling with high-interest debt, such as debt from credit cards, medical debt, or personal loans, it may be time to consider a consolidation loan. Debt consolidation can provide a streamlined approach when dealing with multiple debts, plus possibly save money in the long run on interest.
What is a Debt Consolidation Loan?
A debt consolidation means taking out one loan to pay off one or more debts. Ideally, the consolidation loan has a lower fixed-interest rate compared to the other debt payments, so it can potentially save money in interest over the long run. It also means a singular loan payment, versus managing several at a time.
Benefits of a Consolidating Debt
Opting for a consolidation loan can offer several advantages, such as:
● Simplified payments: Combining multiple debts into one loan means you'll have a single monthly payment, reducing the complexity of managing various due dates and amounts, and less to keep track of.
● Potential interest savings: Consolidation loans often come with lower interest rates compared to credit cards and other high-interest debts, leading to potential savings over the life of the loan.
● Improved financial management: With only one payment to focus on, budgeting becomes more straightforward, helping you stay on top of your financial obligations and perhaps lessening the chances of late payments or fees.
Consolidation Options at Space Age Credit Union
Loan consolidation isn’t a one-size-fits-all approach, in fact, Space Age CU offers multiple solutions so you can find the most appropriate option for your finances.
Home Equity Loans
Homeowners can leverage their home equity and tackle high-interest debt at the same time. Two options with Space Age include:
● Second mortgage: This fixed-rate loan is secured by your home and typically offers lower interest rates compared to unsecured debts like credit cards. You can use a second mortgage to consolidate high-interest debts into a singular, more manageable payment.
● Home equity line of credit (HELOC): A HELOC provides a variable-rate line of credit based on your home's equity. It allows for flexible withdrawals over a five-year period, so you can consolidate debt as you need to.
Unsecured Loans
Whether you’re a homeowner or not, you may have other options as well, including:
● Low-interest credit cards: Transferring balances from high-interest credit cards to one with a lower rate can reduce the monthly interest payment. Space Age offers VISA® Credit Card options with lower variable or fixed-interest rates.
● Signature loans: These unsecured loans can be used for various purposes, including debt consolidation, while offering fixed interest rates and repayment terms.
Before You Apply for a Consolidation Loan
Take a moment to understand what debt you currently have and what is most beneficial for consolidation. Having crucial information in hand, such as the current interest rates and balances, can ensure you make an informed decision before applying.
Space Age Credit Union will work with you as you determine which option provides the best solution. Contact us today to find out how easy it is to get started.
