Bottom Line Up Front:
- A debt consolidation loan can help you pay off several debts at once and streamline your monthly payment into one fixed amount.
- Personal loans are most often used for home renovations, unexpected expenses or emergencies.
- Loan amounts with Navy Federal range from $250 to $50,000.
Taking out a personal loan or consolidating your debt can be a helpful financial move. If you need help paying for upcoming expenses or consolidating high-interest debt, one of these options may be just what you need.
Personal Loans and Debt Consolidation Loans
Personal loans are often used for renovating your home or covering unexpected expenses. A debt consolidation loan is a type of personal loan—it’s used to pay off several debts, streamlining your monthly payments into one fixed amount. Both types of loans offer lower interest rates compared to credit cards. So, which should you choose, and what’s the difference?
The main difference between the two is the purpose of the loan—whether it’s for debt consolidation or personal expenses. With a debt consolidation loan, the requested loan amount is based on the existing loan balances you’re looking to consolidate. The funds you receive from the loan will go toward paying off those debts.
When you borrow money with a personal loan, the financial institution may be able to deposit the funds right into your checking or savings account. You may choose to spend them on personal expenses, pay off other debt or a combination of both.
Perks of a Personal Loan
Personal loans offer several key benefits:
- Flexibility. With a personal loan, you have the flexibility to use the funds to meet your goals. You might use it to pay for home repairs and other expenses that pop up. Or, you could pay down credit card debt.
- Cost effective. A personal loan provides an efficient way to borrow money without adding to existing credit card debt.
- Fixed rates. Another benefit is the predictability of a fixed-rate loan compared to fluctuating credit card rates. Your monthly payment stays the same for the life of the loan.
Benefits of a Debt Consolidation Loan
When you take out a debt consolidation loan to pay off existing debt, you’ll benefit in a few ways:
- Convenience. If you have multiple credit card and loan payments, all with varying amounts and due dates, consolidating debt means you’ll have just one monthly payment to keep track of.
- Reduced interest payments. If any of your debt is at a high interest rate, consolidating debt into one lower-interest loan may help you both lower your overall monthly payment and pay less in interest over the long term. And, like a personal loan, your monthly payment will stay the same for the life of the loan with a fixed rate.
Find a Loan That Fits
At Navy Federal, you can simplify your finances with a competitive, fixed-rate personal loan for debt consolidation or personal expenses. Choose a debt consolidation loan or personal loan to match your purpose for borrowing. We offer loan amounts from $250 to $50,000, with terms ranging up to 60 months.1 Plus, you won’t pay any origination or prepayment fees. In most cases, loans are funded the same day you apply.
Need More Guidance?
Get personalized help from a financial expert through Navy Federal’s Personal Financial Counseling. We’ll help you overcome debt, take control of your credit and take the next step toward your financial success.