Getting finances in order can sometimes be a daunting task for people who have not been the best with their money. Debt starts to pile up, and finding any type of resolution can be challenging.

What some people can turn to is a debt consolidation loan. Dutton Lending is just one of many companies that offer this option for those who qualify.

Many might be hesitant since debt consolidation loans don’t always have the greatest reputation when misused. Are they worth getting? This is a look at the pros and cons, with a final recommendation at the end.

What is a Debt Consolidation Loan?

A debt consolidation loan is a single loan people use to pay off all their debts at once. Instead of owing money to a bunch of different sources, people get the opportunity to pay just one loan back.

This simplifies things, but it allows people to understand exactly where they stand to get back on track. In most cases, people go with a lender specializing in debt consolidation loans. Dutton Lending is one of those companies out there with a good reputation.

What are the Pros of Debt Consolidation Loans?

The reason why debt consolidation loans are so popular is that they do work when used correctly. When the right person takes them out, there’s a chance of getting back on track very quickly. These pros are beneficial for many out there.

Simplified Finances

Anytime a person can combine multiple debts into a single loan, it reduces overall stress. Their finances are simpler, and they don’t have to worry about due dates or interest rates from different companies.

That simplification also helps with someone’s credit since it’s easy to remember one monthly payment. Missing just one payment can severely impact a person’s credit if they aren’t careful. It’s much easier to slip your mind when 4 to 5 debts are being paid off separately.

Faster Payoff Opportunities

Shopping around for the right debt consolidation loan can benefit a person’s wallet. In many cases, a person can get a loan accruing less interest than the individual loans they were working with in the past. This means someone might be able to make more than just a minimum payment, which will help pay off debt earlier.

This type of action usually needs to be taken by the individual instead of setting up a higher monthly payment plan than the lender. They will be very gracious with the minimum monthly payment, but anyone will be much better off making as high of a payment as possible each month.

Shrinking Interest Rates

As stated above, there’s a chance that a debt consolidation loan comes with a lower interest rate. Since so many companies compete to offer excellent services, it helps keep interest rates down as much as possible.

Dutton Lending is one of the companies that has always tried to keep the interest rates down. However, it also depends on where the original debt comes from. Most people get great rates with student loans, but debt consolidation loans almost always have better rates than credit cards and similar lines of credit.

Smaller Minimum Monthly Payment

When getting a debt consolidation loan, all future payouts are spread out over the long term. For those struggling to make the minimum payment, this could be a huge blessing in the beginning.

Of course, making more than the minimum payment will turn things around a lot faster. Some people might have to go down to the minimum payment at first, but the goal should always be to pay more than the monthly payment.

Cons of Debt Consolidation Loans

They come with many positives, but debt consolidation loans have some cons people should be aware of. Those responsible enough to look at the cons can easily handle them.

Added Cost

Check if a debt consolidation loan comes with any additional fees. Anything from origination fees to balance transfer fees could be part of the final cost. It’s important to get the true cost of each loan before signing.

Most lenders are pretty upfront about their costs, which helps the consumer overall. Be smart about investigating every lender first.

Additional Interest in Time

A lower minimum monthly payment could take longer to pay off all debt. Even if the interest rate is slightly lower when consolidating, the interest amount over the life of the loan could be higher. That’s why it’s important to break the habit of only making a minimum payment.

It’s easy to get approved at first with a brand new interest rate, but that only really is effective if a person stays on top of making timely payments.

False Sense of Security

It’s important to remember that debt consolidation loans don’t solve financial issues overnight. It needs to be a change in spending habits to avoid falling more into debt during that time.

It’s easy to fall for the illusion that a debt consolidation loan opens up more credit for instant use. However, focusing on paying back the debt first should be the main priority.

How to Get the Best Debt Consolidation Loan

After weighing the pros and cons, anyone who has issues with a large amount of debt and is looking to make their life a little bit easier should consider a debt consolidation loan. Going with trusted companies like Dutton Lending helps out tremendously as well.

Any company like Dutton Lending with a team ready to help out customers is great overall. That’s why they take every applicant seriously and set them up for success.

Debt consolidation can backfire when mismanaged, but a responsible approach makes it a must-have for many. Numerous success stories show it’s a true game-changer in handling debt.