Millennials between the ages of 25 and 34 years owe an average of $42,000, making them one of the most debt-burdened groups in the country. Credit card balances make up a quarter of what these people owe, closely followed by student loans at 3%.
Incredibly, mortgages make a paltry 3% of the debt burden. If you’re struggling under the weight of such a responsibility, it’s time to pushback and keeps it from overrunning your life. With the help of signature loans here in Salt Lake City, residents are increasingly getting a better handle on their finances.
Credit cards are expensive
While credit cards are convenient, they carry a high interest rate. The average rate on these cards is 14.1%, with some running as high as 30%. At such rates, carrying a balance on your cards quickly puts you at the mercies of the compounding interests.
Most people don’t realize the value of paying off their cards at the end of each month until it’s too late. Once the charges start piling, it’s quite challenging to pay them down. Unless you come up with a smart strategy that will helps cut down the costs.
Debt consolidation is a proven way to escape high-interest rates and avoid paying a fortune in interest. It involves transferring all your debts to a lender with lower interest rates. And that’s where signature loans come in to save the day.
Getting a signature loan
That they need no collateral is one of the most ingratiating features of such loans. It’s also one of their greatest drawbacks. Lenders will dig into your credit history, income, and credit score before approving your loan.
Given that you won’t put up any collateral for the loan, the bank needs to be sure that you’re in a position to honor all your payments. A high credit score, a positive credit history, and stable source income increase your chances of qualification.
Signature loans enhance your ability to get rid of your debt quickly, but first, you must do the heavy lifting. You must convince the lenders that you are a creditworthy individual who poses no threat to their money. Polishing your credit history, increasing your credit score, and growing your income put you in their good books.
The saving power of signature loans
If lender likes what they see when digging into your history, they will not only approve your loan but also do it at the best possible terms. The key here is to keep the interest rates as low as possible. Lower than any other debt you’re carrying.
The principle here is that you can take out a cheaper loan and use it to pay off the expensive debts such as credit cards. Say, for instance, get a loan at 7% and use the money to eliminate debt with a rate of 15%. In such a situation, you lower the amount of money payable to the bank.
Financing the debt at a lower rate lets, you pay off the loan quick quickly as the bank takes a smaller amount in interest. Signature loans feature equal monthly payments. Since the amount payable in interest is lower, you can eliminate the debt in a shorter time.
It takes a smart strategy to get out from under crippling debt, especially when such debts carry a high-interest rate. Taking out a signature loan at a lower interest rate can help you eliminate such debts.