Hi everyone, I’m new here and really need some advice. I have a total of $28,000 in debt. $15,000 is from credit cards with 18% APR, and $12,000 is from a car loan at 6%. Plus, I have a few smaller payments. Would it make sense to take a personal loan to pay everything off so I can have just one payment and hopefully lower my interest? I’m feeling overwhelmed, so any tips would help.
I did this not too long ago. I had about $17,000 in credit card debt with 28% interest. I got a personal loan from a credit union at 6% APR, and now I’m paying much less each month. It was definitely worth it for me because I stopped accruing tons of interest. Just make sure the loan’s interest rate is better than what you’re currently paying, or it could cost you more in the end.
Thanks for sharing! I’ll definitely look into this.
You’re welcome! Just remember not to use those credit cards once they’re paid off, it’s so tempting to use them again when the balance is zero!
True! Not everyone can manage credit cards, and that’s okay. There’s always more than one way to deal with debt.
Exactly! And once you’re done paying off the cards, avoid using them unless you can pay the full balance each month.
Would you recommend getting the loan from a bank or something like Upstart?
I’d say go for a local credit union if you can. Upstart tried to charge me 30% for the amount I needed, which was crazy considering my credit score.
Be careful! A lot of people end up with maxed-out credit cards again even after getting the loan. The real issue isn’t the math, it’s habits.
That’s true. But debt can happen for many reasons, not always because someone is bad with money. Life’s tough for a lot of people right now.
It’s unlikely you’ll find a loan lower than 6%, so maybe just keep the car loan and try to refinance the credit cards. Just be sure to account for any origination fees.
A personal loan could work for the credit card debt, but I’d keep the car loan separate. Make sure you get a good APR, though.
If your car loan is 18%, you might have a low credit score. You don’t want to pay off one loan with a higher-interest loan. Look into nonprofit credit counseling for your credit card—they can usually help reduce payments and interest.
Edit: My car loan is 6% and I have a 740 credit score.
With your credit score, it might be hard to find an unsecured loan at a better rate. Look into nonprofit credit counseling and compare what they can offer you. Focus on paying off the highest-interest debts first, and try to save a little for emergencies in a high-interest savings account.
You could try getting a loan to pay off both debts at a rate lower than what you’re paying now. If the monthly payment ends up lower, that might make it worth the hard inquiry.
That’s a great credit score! If you do get a loan, try splitting your payments—pay half halfway through the month and the rest on the due date. It’ll help boost your score. Even small extra payments can help reduce the interest you owe. And unless you find a loan lower than 6%, it’s probably better to keep your debts separate. Always pay extra toward the highest-interest debt first.
A personal loan might be a good idea for the credit card debt, but you really have to stay disciplined and not use the cards again unless it’s for small, manageable purchases like gas.
As I mentioned earlier, the key is to get a loan that gives you both a lower interest rate and a lower minimum payment than what you’re currently paying. Otherwise, it’s not worth the hard inquiry.
This only works if you stop using your credit cards and don’t accumulate more debt. Make sure you don’t end up in the same position again.