How to Pay Off Debt With a Debt Consolidation Loan VA
If you’re struggling with debt, you aren’t alone. Whether you’ve borrowed money or used credit cards, interest charges increase your balance over time. In the end, you pay more than originally borrowed, and it can seem like an unmanageable situation. However, you may qualify for a debt consolidation loan VA so that you can pay off the debt faster and save money.
Virginia Debt Statistics and Laws
Like many other residents of Virginia, you may have a high amount of debt. In fact, the state ranks sixth in the country for high levels of student loans, mortgage, and credit card debt.
As of July 2012, each person in Virginia owed an average of more than $6,000 to credit card companies. Balances were especially high in Richmond and Norfolk. For mortgages, they owed an average of about $215,000 as of January 2012. When it comes to student loan debt, 2012 graduates owed an average of nearly $31,000. By comparison, all of these state averages were higher than the national averages.
Of course, the best approach to repaying debt is to avoid missing payments and filing for bankruptcy. If you’re beginning to struggle financially, a debt consolidation loan might be the ideal solution.
What Is a Debt Consolidation Loan?
A debt consolidation loan is a personal loan that combines multiple lines of credit. They go into a single account under one lender so that you only have one payment. The loan can be used to combine unsecured debt such as:
- Credit cards
- Payday loans
- Personal loans
- Medical bills
You’ll likely have a lower interest rate, which will save you money in the long run. Keep in mind, though, that the longer that you have the loan, the more interest that you’ll pay overall.
How Does a Debt Consolidation Loan Work?
The two types of debt consolidation are unsecured and secured. The main difference is that an unsecured loan doesn’t use collateral, but a secured loan does.
Aside from not requiring collateral, an unsecured debt consolidation loan may be easier to get than a secured debt consolidation loan. Your FICO credit score can be low, and your debt-to-income ratio can be up to 50% with some lenders. Applying is convenient because lenders are available in physical locations and online, the latter of which offers instant approval. On the other hand, the interest rates are usually higher with an unsecured debt consolidation loan.
Since a secured loan uses collateral, such as your car or home, the interest rates are usually lower. As a result, you save money on interest while you pay off your debt. In fact, you can get a fixed interest rate when you use the equity in your home to secure the loan. Then, you can deduct the interest that you pay on your taxes. On the other hand, you risk losing your home if you can’t pay the loan.
How We Can Help You Become Debt-Free
If you need help paying off debt, and are considering a debt consolidation loan VA, contact a professional at UmbrellaDEBT Relief to learn more. We will work with you to discuss the best options to become debt-free.