Could a Personal Loan Help You Pay Off More Debt by 2023?

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If you hope to be debt free, you need to read this.


Key points

  • Paying off debt can be challenging, and this is especially true if your debt carries a high interest rate.
  • A personal loan could help lower the cost of your debt and make repayment easier.

if you wait be debt free By 2023, or at least make a big dent in your debt, you don’t have much time left to work on this goal. And, there’s a potential move you could make that can make paying off your balance a lot easier (depending on your situation). could you take a personal loan.

Borrowing more money can seem counterintuitive when you’re trying to get out of debt. But, in some circumstances, it might be exactly the right move. This is why.

How a Personal Loan Could Help You Pay Off Your Debt Faster

Getting a personal loan could help you pay off more of your debt by 2023 Yes your personal loan has a lower rate than the debt you are currently trying to pay off.

See, if you have high-interest debt (such as Credit cards), it is very likely that a large part of each payment you make is being consumed by interest. You may pay too little principal because your finance charges are too high. So all those payments you’re working so hard to send to your creditors may be doing very little to help you make progress toward your goal of being debt-free.

If you can qualify for a low-interest personal loan, you can switch that debt from a high interest rate to a low interest rate. For example, instead of paying 17% annual interest on a credit card (or more), you could pay 8% or 10% or whatever rate you qualify for on your personal loan. Then you use the proceeds from your personal loan to pay off that expensive credit card debt.

If, for example, you owe $4,000 on one card and $5,000 on another, a $9,000 personal loan could free you from both loans. You would have only one debt to pay and at a lower interest rate.

Once you’ve lowered your rate, much more of your monthly payment should go toward lowering your balance so you can be debt-free sooner. This can help you make much more progress in your debt repayment methods for the rest of this year and next.

Is making this move right for you?

Refinancing your high-interest debt may be the right decision if you can qualify for a new loan at a lower rate and you won’t extend your repayment term too much by doing so. You can use your new low-interest personal loan not only to lower your credit card rates, but also for any type of expensive debt you have, like payday loans or medical debt.

You can shop around and find out what rate you can qualify for without hurting your credit score to find out if this approach will work. You’ll also want to make sure you can comfortably make your new personal loan payments and that you’re living within a budget so you don’t end up charging more on your credit cards after you pay them off.

If you can get a new, low-rate loan and can count on yourself to be responsible for repayment, there’s no reason not to move forward with this strategy as soon as possible so you can pay off your maximum debt by 2023.

The best personal loans from The Ascent for 2022

Our team of independent experts pored over the fine print to find select personal loans that offer competitive rates and low fees. Start by checking out The Ascent’s best personal loans for 2022.

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