Dealing with debt can feel like a never-ending struggle. As soon as you pay one balance down, something comes up, and all of a sudden, you’re right back to where you started.
Wouldn’t it be great if you could find a way to pay down your debt once and for all? If your current debt management efforts haven’t been working, it may be time to consider debt financing.
Debt financing is the practice of temporarily taking on more debt so you can pay off high debts faster. Many people have considered taking out a business loan or getting a personal loan to end the debt cycle finally, and it could be just what you need to pay everything off once and for all.
Are you on the fence about whether or debt financing is right for you? We’re here to help you make the right decision. If you find yourself in any of the following three scenarios, now may be the right time to consider taking out a loan.
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Do you have a hard time remembering when you have to make payments? Have you found your debt balance growing because you keep getting hit with late fees and penalties? If so, taking out a loan could be a good option.
Keeping up with debt can be difficult if it’s coming from a lot of different sources. Instead of setting a variety of reminders to pay your bills, paying everything off with a loan could save you plenty of time and money.
Remember, your debt isn’t just the balance you owe. Interest plays a part in it. Some interest rates are relatively easy to manage, and others could be making your debt situation unmanageable.
Things can add up when you have a high interest rate. Paying things off quickly won’t just get you out of debt. It can also help ensure that you don’t pay more than you owe.
It’s also worth noting that personal loans can have much lower interest rates than some credit cards. If you’re drowning in interest payments that can be as high as 20%, taking out a loan with a 10% interest rate can be a better move in the long run.
You may keep getting credit card offers, but that doesn’t mean that you have a good credit score. Many people can find themselves in a vicious cycle where they’re constantly taking out high-interest credit cards to pay off debts because they can’t find anything else. All of those open accounts and debt can cause your credit score to take a severe hit.
Wouldn’t it be nice to be able to pay off your debt and drastically improve your credit score? If you decide to manage your debt through a loan, you can do both!
If you decide to take out a loan, you’ll be able to pay off your debt, improve your credit utilization rates, and open up a new line all at once.
Taking out more debt to handle debt may seem counter-intuitive. However, if you address things the right way, debt financing could drastically improve your financial situation.
Do you want more help creating a solid debt management plan? Are you curious about other ways you can build your credit? Get in touch with us so we can plan your bright financial future together.
Michael is the Chief Revenue Officer and co-founder of Prudent Financial Solutions. Michael’s career in the FinTech space began in 2015 as a Financial Consultant at Strategic Financial Solutions. Michael quickly became a top producer in the organization. He served as a member of the internal advisory board that helped streamline processes and drive organizational change. He later joined Premium Merchant Funding, an alternative lending firm that specialized in small and medium business financing. Michael served as Managing Director of G&G Funding, where he managed a full sales team and was responsible for driving revenue. Michael graduated from Providence College with a Bachelors of Science in Finance and Accounting.