Do you want to pay your debt off in five years of less? Installment loans can be an effective and cost effective way to accomplish this goal. If you carry high balances on credit cards, this is an easy way to lower your payment and pay off your debt in a shorter amount of time. High interest rates are costly and can make it impossible to pay off the balance on your credit cards. You can lower your interest rate and have a set amount of monthly payments with an installment loan. Having to make several payments instead of one can be cumbersome, and making one payment is much easier. This can effectively eliminate your debt in a matter of years or months. In order to use an installment loan wisely you will need to evaluate your spending habits.
The most common failure with debt consolidation loans is that people will charge their credit cards up again while paying on the installment loan. This defeats the purpose of the installment loan and you end up paying for your installment loan and your credit card payments at the same time. This will add to your bills and make your bills harder to manage. Make sure that you are taking the steps necessary to make your debt consolidation loan a success.
If your goal is to pay off credit cards the best way to use an installment loan to pay them off would be to forgo using your credit cards while you are paying on your installment loan. This will keep you from charging up the debt on your credit cards again.
If you can afford the payments that you are making on your credit cards now use the extra money from your lowered payment to meet expenses. If you cannot afford the credit card payments you have now a good budget would be in order. Learn to live off of what you make. When you sit down and evaluate what you actually spend it is easy to find a little bit of extra money. There are many places that you will be able to cut down on your spending by evaluating where each dollar is going. Do you eat out twice a week or more? Cook at home this will save you a lot of money on your entertainment expenses. Your leftovers will provide a great lunch to take to work the next day and this in turn saves on your work expenses. There are many places that you can cut costs. This will make an installment loan a wise decision and effectively consolidate your debt.