By Sean A. Kelly

As you see the interest rates going down, you might like to know how well it would work in your favor and see how best can your loans be restructured to reduce your monthly payment and interest rate. And on the same lines the solution you might have thought of refinancing your loans. Before you do so, you need to gauge its benefits and evaluate if it is worth the trouble. Assess what type of credit you have and then compare the terms of refinancing to see if you can achieving any real savings.

If you are thinking of refinancing your personal loan, having a good credit and steady job are imperative as the lender bases approval on your creditworthiness.

Some benefits that you must be able to achieve by refinancing your personal loan other than the primary reason of lower monthly payments is that you must also be able to request for longer term for repayment as it would lower monthly payments further. Again, if you are considering refinance as an option for an emergency purpose or to pay off your high interest credit card debt, you should be able to borrow more than the original amount.

Another option to consider other than refinancing for paying your credit cards debt is the good loans debt consolidation option. Debt consolidation loans are also available as unsecured personal loan other than the ones most commonly heard like mortgages or as secured loan. To make some financial responsible moves and tackle your different debts cleverly, debt consolidation would be a worthy financial step. If you have a credit history that is decent it would be easier to get a much lower interest rate than what’s available on more traditional debt consolidation loan.

Some benefits mentioned below will allow you to decide better. As an unsecured loan for debt consolidation is often available at rates lower than the interest rate on your credit cards your monthly payments will be lower than most of your current bill payments. Secondly, low debt consolidation loans are usually available for a longer term than regular loans. Thirdly, by centralizing your debts at one location you can pay off all or most of your unsecured bills (credit cards, payday loans, medical bills etc) and reduce stress level as you can pay multiple bills using a single debt consolidation loan and avoid dealing with several creditors. Fourthly, when you pay off your debts with a single debt consolidation loan, it will have a positive impact on your credit. As such, your credit score will shine and boost your FICO score.

As you measure the benefits that are listed it is also important to understand the disadvantages. An unsecured bank loans debt doesn’t provide you with any tax benefit. This is because the interest on a personal loan is not tax deductible just as the interest on a mortgage loan and usually unsecured loan involve longer repayment terms.

Finally you need to draw a clear picture of the total interest charges, fees and principal payment you will make in a year and measure them with how much payment and fees you will make against the loan option you choose for a year and also consider what will be the final cost by the end of term. It will help to bring your finances on track and as mentioned also create a positive impression on your credit too. Also be on look for a reputable organization that has experienced consultants and the capability to be your one stop resource for saving money.

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