How To Pay Off Your High-Interest Debts With A Lower Interest Loan?
Interest payments on our credit card utilization are always stressful, and nobody likes them. On top of that, these dues keep on increasing as the balance goes down only a small amount goes to our owed amount. So, what’s the solution?
It is paying off all of these high-interest debts first. It’ll not only reduce our debt difficulty but will also help us to save in the long run. But is it possible for you to pay those high amounts from your pocket right away? Will you be able to afford it? Would you be able to deal with your present financial hardships by planning your future savings based on this plan? Thinking about the logical answers to all these questions, this certainly doesn’t look like a good idea.
But when there is a problem, there’s always a solution to it somewhere. All you have to do is work it out. And the best thing to get over this financial trouble is to get a low-interest loan to bail you out. Let’s see how we can help ourselves to come out of high-interest debt trap.
Prerequisite For Applying To A Lower-Interest Loan
After making up your mind to deal with your high-interest debts this way, you should start steering in this way with a set plan, and the first thing to do is fulfilling all the prerequisites to secure a low-interest loan. But if you compare loans online, you will see why fortune credit offers low-interest loan, you would see various qualifying factors to obtain low-interest loans.
Improve Your Credit Score
Having a good credit score is imperative to have a loan at a low rate of interest. You have fallen in the high-interest debt trap in the first place only because of your low credit score. Higher your credit score, lesser will be the interest rate of your loan. So, if you are determined to secure a low-interest loan, do everything you can to improve your low credit score.
Meet All Your Financial Obligations On Time
The next thing should be to meet all your fixed obligations on time. No more default payments in credit card dues or Equated Monthly Installments (EMIs). This would help you to strike a better deal while taking a low-interest loan.
Improve Your Professional Credentials
Not having a good credit history doesn’t mean that you can never have a loan at low-interest. Your work can play an important role here. If you are employed in a highly reputed company or are quite well-off financially, simply highlight this fact while securing a deal of a low-interest loan. The moneylender would be more than happy to know that his money is not at any risk.
Steps To Pay Off Your High-Interest Debts With A Lower Interest Loan
We all have had a debt, small or big, to pay off at some point in our lives. And if it is a small amount, without having realized how did that happen, it becomes pretty big somehow with all the compounded interest dues. Then starts a debt cycle. All we need to break that circle is follow some steps.
1. Make A List Of All Your Debts And Payments Thereon.
To clear all of your high-interest debts, firstly you must know how much in all you are supposed to pay after all. And to ascertain that, make a list of all your monthly obligations, i.e., the interest amounts due or all the balances owing on each credit card. This would help you to finally know the quantum of the balance you need to pay each month.
2. Look Out For All The Lower Interest Loans Available.
When paying off high-interest debt, you should always consider paying it with a loan carrying a low-interest rate. Just to end the current troubles, many people opt to pay them off with just another credit, without paying attention to its interest rate. If you happen to be one, don’t commit another blunder and look only for comparatively low-interest loan options. And they are many. Banks, financial institutions, peer-to-peer lenders, online moneylenders, instant borrowing options. Just pick the one that suits your needs.
3. Apply For The Loan With Lowest Interest Payout
Once you have short-listed the few best loan options available, apply for a loan from the one offering it at the lowest interest payout every month. Do not hesitate to go ahead with your decision, thinking it as a new burden in exchange. Think of it in a way that now you’ll be paying a lesser single amount every month rather than higher multiple amounts. You’ll also be saved from managing all these various cut-off dates.
4. Pay Off Your High-Interest Debts.
Now once you have completed all the loan formalities and verification, the loan will be sanctioned to you. And the moment funds are credited to your account, do not delay as it will cost you another day of high-interest. Moreover, seeing money in your account can also tempt you to spend it somewhere else. Do not commit such a big financial mistake. You are already in a debt trap, and spending this money would mean another interest charge along with an existing high-interest fee. After paying off the old debt, just try not to use your credit card for some time. However childish it may sound, lock the credit card in a safe for a few months. It always works.
Securing a loan from a licensed moneylender is undoubtedly the first option for all of us. But if it is not possible to exercise it, there are few other ways to borrow money at a low-interest rate:
- Asking your creditors for a low-interest loan could just be another option only if you are not a serial defaulter. Many credit card companies oblige in such cases.
- Borrowing money from your friends is another option but not free of charge. Offer him to pay a particular interest; he might oblige.