Debt consolidating remortgage loan
This works out to ,136.88 being paid in interest alone over time.
If the same individual were to consolidate those credit cards into a lower-interest loan at an 11% annual rate compounded monthly, he or she would need to pay 2.16 a month for 24 months to bring the balance to zero.
Although each lender will probably require different documentation depending on your credit history, the most commonly required pieces of information include a letter of employment, two months' worth of statements for each credit card or loan you wish to pay off, and letters from creditors or repayment agencies.
If you have a good payment history with a bank, credit union or credit card company, asking that institution about a debt consolidation loan should be your first step.
Home equity loans or home equity lines of credit (HELOC) are another form of consolidation sought by some people.
A consolidation loan may also be kind to your credit score down the road.
“If you can get your bank to approve a loan, that’s great," says Tim Gagnon, assistant academic specialist of accounting at the D' Amore Mc Kim School of Business at Northeastern University.
"But your bank may not be looking to keep you as a client and your credit scores may not be high enough to meet their lending requirements.” If not, you should start by paying off your highest-interest debt first.
Even if the monthly payment stays the same, you can still come out ahead by streamlining your loans.
Say that you have three credit cards that charge a 28% APR; they are maxed out at ,000 each and you're spending 0 a month on each card's minimum payment.