No matter who you are, consumer debt can take over your finances. However, military personnel and their families face unique financial circumstances. If you are or were in the military carrying debt, you may be wondering about consolidation or debt reduction. Consolidation loans for military personnel are one way to help get your finances back on track.
Pros & Cons of Consolidation Loans for Military Personnel
First, what are consolidation loans? This type of loan pays off multiple accounts leaving you with just one debt and one interest rate. Additionally, consolidation loans offer the possibility of paying the money back over a longer period. This way, it helps you lower your monthly payment even further than with several debts at once.
While this is a step in the right direction, credit history and score come into play when securing a consolidation loan. Lenders favor those with good credit. Many companies offering credit card debt consolidation loans will charge higher interest rates or include hidden fees and charges. You may end up in more debt. This is especially true if you haven’t found a way to address the financial issues that got you into debt originally.
Fortunately, many lending institutions, including the Federal government, acknowledge and value the service done by military personnel and their families. Having that status and background often has perks regarding qualification, interest rates and more. Since every situation is different, it’s best to approach your lender directly. You should also shop around using the Internet, word of mouth and any other resource offered to you to find the best way to consolidate.
Your research should include term length, interest rates, APR, etc. Additionally, take a look at your own budget. Since you are carrying debt, you must be stretched too thin. Figure out the payment that works for your budget. This way you can be prepared going into any meeting or when reviewing the information sent by your lender about a specific loan product. This is another way to know if a consolidation loan can really work for you or if you need something more serious, like bankruptcy debtor education.
For more information, visit ACCC’s Veterans and Military Personnel Financial Education Center. If you’re struggling to pay off debt, schedule a free credit counseling session with us today.