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Use a 5000 Dollar Loan for Consolidating Debt

Monday, January 6th, 2014

Recent studies have shown that personal loans, such as a 5000 dollar loan, are the best choice if you want to consolidate your debt. Does it come as a shock? It really shouldn’t; let’s take a look at why you can (and perhaps even should) use a 5000 dollar loan for consolidating debt.

First of all, debt consolidation is needed to simplify your bills and to secure a lower and/or a fixed interest rate. Think of it like this: you’ve got three small loans that you need to pay off as soon as possible and the best way to pay them off is to merge them into one loan. In this case you’ve got two options: the first one is a credit card and the second, a personal loan. Credit card interest rates average at around 18% while an unsecured loan averages at around 16%. You’ve got your answer right there, don’t you? Not so fast, let’s take a look at some pros and cons of debt consolidation.

Is debt consolidation for you?

Every situation is different and we can’t really tell you that taking out a 5000 dollar loan is the perfect option for you. We can only suggest it as an alternative. You and you alone can make this decision. Know that a debt consolidation has its pros and cons and that while it may do wonders for some, for others it may not work that well. One important thing you need to keep in mind is that if you’re thinking of consolidating your debt, the interest rate for a personal loan is lower than a credit card interest rate. Make the right choice, use a 5000 dollar loan for consolidating debt, and your future self will thank you for it.

Pros of using a 5000 dollar loan for consolidating debt

A 5000 dollar loan for consolidating debt will work for you if you have high interest installment loans, such as a car loan or a student loan. Rolling all your debts into one makes avoid extra charges and fees and it also has a positive impact on how you perceive your debts. Knowing you have just one payment instead of three or four will surely ease your mind.

The biggest pro of debt consolidation through an unsecured 5000 dollar loan, for example, is that there is no property at risk. While the interest rate can be higher than that of a secured loan, it is, as mentioned earlier, less than those of credit cards. What you need to do is to negotiate your interest rate to ensure that you are indeed, going to pay less than what you are already paying. Getting a loan to consolidate your debt can even help your credit because it is going to reduce your debt and your monthly minimum payments and all this affects your credit score.

Cons of using a 5000 dollar loan for consolidating debt

First of all, a debt consolidation loan may prove hard to get, because not many people will qualify. You need to do a little bit of digging to see if you do, but we’ll tell you right off the bat that if you are over 18, a citizen of the US, have a job and a good credit score, then you will most likely qualify. Think before taking this step, because a 5000 dollar loan needs to take away some of your problems, not add to them. It needs to make a difference in your financial situation.

Another con is connected to the low-interest period which is limited, most of the times. If you fail to pay the debt during the time allotted, you might end up paying higher interest rates. Again, we urge you to shop around for companies who offer unsecured loans and know that only after you’ve informed yourself on the matter, will you be able to take an educated decision.