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- Hi there, I'm really interested in reducing my monthly payments for my credit cards, and a personal loan seems like a good solution. Should I borrow exactly enough to pay off my debt? I don't want to end up with a single higher payment.
- Hi - let's break it down a bit and take a look at the numbers to see what's the best option. 1) Looks like you have $5,250 in total debt. 2) You’re paying $200 in card payments each month. Does that sound right?
- Thanks for confirming that. At first glance, it looks like you may have a hard time getting a payment that is around $200 for the total loan amount, but not impossible! Is your annual income still $40k?
- Lenders will look at your income as a decision on whether a loan would be risky or not
- That's where it gets tricky.
- When I got the cards I was making roughly 40k annually, but I was laid off and now make about half of that.
- However I am married, so between the two of us it's closer to 55k.
- Got it. So technically, you can list your combined income. This may definitely help your chances of getting approval. I would say these are the options:
- 1) You can try getting quotes using your combined income for the total amount. The advantage of this is you have one lump payment to worry about. The downside is you now have a fixed payment, so if you take more than you can afford, you may end up racking the credit card debt back up to pay for things because your monthly payment is too high. Also, you may have a higher APR on that loan because the debt to income ratio would be higher.
- 2) The other option is taking out a smaller loan, perhaps half, clearing out half of the debt, and then, if possible, splitting your funds between the credit card and the loan payment. The advantage here is you can possibly get a lower interest rate and keep your monthly payments lower. The downside is you will now need to manage both the credit card debt and the loan payment. But, it could put you in a good enough position to re-apply in the future to consolidate all of your debt completely with a lower interest rate and bundling it all under one loan.
- Both good options. That would have taken me forever to google.
- You are most welcome. Let us know if you decide to get a loan and we’ll help you apply.