If you have debt spread across multiple credit cards and loans, it can sometimes be difficult to keep track of all the payments that need to be made each month. Designed specifically for veterans and their families, VA debt consolidation loans can help you regain control over your finances, but only if you do it right. Here’s what you need to know.
How VA Debt Consolidation Loans Work
A VA debt consolidation loan enables you to pay off your current debts using the money from the new loan. Typically, you’ll provide all of the account information for the accounts you wish to pay off so your lender can handle the money transfers for you. This turns all of your smaller debts into one large debt so you only have to make a single payment each month.
In most cases, VA debt consolidation loans will be for $10,000 or more. If the amount you owe is less than this, you are unlikely to reap the same benefits as someone with a larger amount of debt would. Although this is quite a large debt, your monthly payments will likely be much lower than your current total for all your debts.
You’ll also most likely get a lower interest rate for your loan than you are currently paying for your credit cards. When choosing the debt to pay off with your VA debt consolidation loan, start with the highest-interest debt first, then work your way down. If you have any debts with lower interest rates than your new loan, you are better off continuing to pay them on their own to save more money on interest.
Deciding If VA Debt Consolidation Is Right for You
You’ll need to carefully examine your current finances to determine if this path makes sense for you. If you are financially stable and aren’t adding more debt each month, debt consolidation can help you pay off your debt faster and save a lot of money on interest. Having a strong credit score will help you qualify for the lowest possible interest rates, so if yours isn’t as good as it should be, you may wish to wait a bit for it to go up so that you can get a better rate.
Avoid Common Pitfalls
Wiping away all of your credit card debt at once is a great feeling, but it also puts you at risk of falling into a dangerous financial trap in the future. If you are struggling financially, barely scraping together enough money to pay your bills each month, it can be incredibly tempting to start running up new credit card debt now that you have the credit available. However, this will only increase the amount that you currently owe, making it even harder to make your monthly payments. Make sure that you are taking out a VA debt consolidation loan for the right reasons.
Here at Coastal Pacific Lending we are proud to have helped thousands of veterans and their families with VA debt consolidation loans. We’ll be happy to help you out, as well. We’ll go over your finances with you to help you decide if debt consolidation is right for you.
By refinancing your mortgage or starting a home equity line of credit, you can have your high-interest credit card debt paid off in a snap. Our associates will gladly answer any questions you have about the process to help you make an informed decision. Get in touch with Coastal Pacific Lending today at 888-699-3391 to learn more about how we can help you along the path to becoming debt-free.