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Too many people are in debt between their credit cards, student loans, car loans, and mortgages. Some debt, like loans with lower interest, is good. However, high-interest credit card debt isn’t. It can severely affect your credit score and cost you hundreds, if not thousands of dollars in interest over time if you are only making minimum payments each month.

Consolidating and paying off your debts with a loan could be the best answer for how to pay off debt.

How to Pay Off Debt with a HELOC Loan

If you own a home, a home equity line of credit (HELOC) can be a smart move to consolidate and pay off high-interest debt. It is a line of credit that you can take out from a lender that is based on how much equity you have in your home. If you have good credit, the bank could lend you up to 85% of your home’s assessed value minus the amount you currently own on your mortgage.

A HELOC is like a credit card in that it is considered revolving debt. You can borrow money, pay it back, and then borrow it again if you want, which is pretty much like how a credit card works. But unlike a credit card, it is a secured loan, which is why the interest is lower than that of a credit card. And unlike a home equity loan, you do not borrow from the HELOC and repay it in installments until it is paid in full.

How to Pay Off Debt with a Personal Loan

If you have good credit, you may be eligible for a debt consolidation loan, which is a type of personal loan. This type of loan can consolidate all your high-interest debt and leave you with one low-interest payment each month. Some lenders do have loan use restrictions. However, you can typically use a debt consolidation loan to pay off credit cards, medical bills, payday loans, and other personal loans that have higher interest rates.

A personal loan, like a debt consolidation loan, helps lower your debt and monthly payments and pay debt off sooner than you would by making minimum monthly payments. Depending on the lender, most loan terms fall between 24 to 84 months. Meanwhile, you can improve your credit score by paying off your debt as long as you make your required payments each month.

Debt Consolidation, Smart Move for How to Pay Off Debt

It can be easier to pay off debt by combining multiple debts into one new debt, preferably one loan with lower interest. This could make your payments more manageable, get rid of high-interest debt, and allow you to pay off multiple debt accounts in one fell swoop quickly.

When done right and with self-discipline, you can raise your credit scores over the long term by paying off your high-interest debt with a consolidation loan. This involves making your payments on time and not racking up more debt on your credit cards after paying them off.