A new study conducted by McKenzie Valley FCU and Credit.com has found that personal loans are increasingly being used for debt consolidation. The study reviewed loan data over the past year and found that over 58% of personal loan applications were for the purpose of consolidating high-interest credit card debt. The next-closest reason for getting a personal loan is home improvements, with only 6.2%.
Credit card debt is a significant issue for many consumers. Credit card interest rates often range from 15-20%, resulting in high monthly payments and a long repayment period. This makes it difficult for consumers to get rid of debt.
Statistics show that people consider debt consolidation one of the best solutions to this problem. By consolidating debt, borrowers can combine multiple loans into a single one with a lower interest rate. This can help consumers save money on interest and reduce their monthly payments.
The study also found that the average personal loan used for debt consolidation was $15,000, with a repayment period of three years. This suggests that consumers are using personal loans to consolidate large amounts of debt over a shorter period, which can help them become debt-free faster.