How to consolidate debt in a personal loan for the holidays

Christmas is fast approaching, time to spare. By consolidating all your debts into one loan, you can use the saved interest to buy gifts for the family!

A debt consolidation loan combines all your personal debts into one, which means you can benefit from one regular repayment and a lower amount of interest to pay off over time. Let’s take a closer look at it.

What debt can I consolidate?

Usually you can consolidate all your debts into one loan. This can include car loans, credit cards, other personal loans, and even buy now pay later. However, you must remember that lenders have a limit to how much money you can borrow. When looking at lenders, make sure they offer enough to cover all your current debts.

If you have a home loan with a longer loan term than other debts, consider getting a mortgage refinancing. It is not ideal if the home loan is a personal loan as the interest rate on home loans is currently much lower than on personal loans.

How do I know if debt consolidation is right for me?

If you are managing a lot of debts, chances are you are losing money. For example, if you have high-interest credit cards, store cards, or even personal loans, they all add up. A personal loan with a much lower interest rate will help. Remember that if you are able to keep up with your repayments or are close to paying them back, applying for a consolidation loan may not be for you. Just check your finances and find what’s best for you.

Here is an example:

This is your debt ($ 32,000 in total):

  • $ 23,000 car loan in8.00% interest rate
  • $ 5,000credit card balance in the amount of17.50% interest rate
  • PLN 4,000 on the store card in20.00% interest rate

You are currently paying a total monthly payment of $ 1078 if your debts remained separate. Over three years that will finally cost you $ 5,892 in business.

However, if you choose to roll your debt ($ 32,000) into a consolidation loan with an interest rate of 8.00%, your repayment will be $ 1,003. This would mean you will pay for three years $ 4,099 in business – it is saving $ 1,793!

How to choose a debt consolidation loan?

First you need to decide with which lender you want to consolidate your debt. This could be a bank, credit union, or peer to peer lenders. You may even find that your own bank offers this type of consolidation service, but it’s worth shopping around before you get involved.

Sometimes, some of the more competitive consolidation loans are provided by online or small lenders that you may have never heard of before. All the lenders on the Mozo website are accredited lenders so you can have complete confidence in using our debt consolidation comparison chart.

Once you’ve found a lender with a good interest rate and loan amount that works for you, it’s time to apply!

If you want to learn more about personal loans and debt consolidation, check out Mozo’s personal loan guides.

* WARNING: The benchmark rate combines the lender’s interest rate, fees and commissions into a single rate to show the true cost of a personal loan. The comparative rates displayed are based on a $ 30,000 loan for 5 years or a $ 10,000 loan for 3 years as indicated based on monthly principal and interest payments, based on the secured and unsecured base for unsecured loans. This comparison indicator only applies to the example or examples provided. Different amounts and conditions will result in different comparative factors. Costs such as re-collection or early repayment fees, and cost savings such as fee waivers are not included in the comparative rate but may affect the cost of the loan.

^ See information on Mozo Experts Choice Personal Loan Awards

Mozo provides general information about the product. We do not take into account your personal goals, financial situation or needs, and we do not recommend any specific product to you. You should make your own decision after reading the PDS or offering documentation or seeking independent advice.

While we pride ourselves on serving a wide variety of products, we do not cover all the products on the market. If you choose to apply for a product through our website, you will be dealing directly with the supplier of that product and not with Mozo.

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