Two things in life are certain: Death and Taxes. Benjamin Franklin is often credited with that famous quotation, but, actually, he borrowed it from famed author Daniel Defoe, who in turn borrowed it from the English actor and philosopher Christopher Bullock, which goes to show that if a third certainty exists, it is undoubtedly debt.
Debt allows us to attain things that might otherwise be out of reach, like education, business ownership, and property ownership. If we could only use the money out of our pockets or in our bank accounts to fulfill our needs, our lives would be a lot less rewarding.
Two hundred years ago, an individual was limited to the station in life they were born into. But today – in many parts of the world, at least – your success in life is limited only by your work ethic and financial literacy. These days, an individual’s financial health is not measured merely by what they have but by what they owe and their ability to pay it back.
Debt isn’t bad, it is neutral. The real question is how debt is used and managed. As crazy as it sounds, sometimes when you’re debt becomes difficult to manage, the solution is more debt. Consolidating existing debts into a new loan comes with several benefits, but most importantly, it helps you manage your financial commitments with greater efficiency. In this article, we’re exploring the five most pressing reasons doctors should consider debt consolidation, and how Hippo Lending can help.
What is Debt Consolidation?
Debt consolidation is the process of taking out a loan to pay off high interest rate credit cards and existing loans. So, rather than keeping up with several payments to several credit card issuers and lenders, you can simply make one payment each month and be done. Often, the new loan will have a lower interest rate, meaning you save money as well.
1. Save time
Time is money, so spending lots of time keeping up with loan payments is a double blow. First, consolidating your debts means you have one monthly payment to keep up with, so you can stay productive rather than spend hours managing your payments. It’s estimated that the average budget-conscious American spends an hour and a half daily managing their finances. Debt consolidation streamlines your finances into one easy, predictable monthly payment. That means fewer payments to keep up with, fewer late or missed payments, and also fewer interest rates – which not only saves time, but money as well.
2. Reduced Monthly Payments
There are two ways consolidating your debt can lower your monthly payment. First, if your credit score has improved since taking out your existing loans, or if you have paid the existing loans down significantly since you first took them out, you may end up with a lower monthly payment on your new loan.
Second, since you are taking out a new loan, you are also getting a new loan term – meaning you will likely have more time to pay off your balance. Spreading your payments over a longer term allows you to pay less each month. It’s important to note, however, that lower monthly payments over a longer term could cost you more over the life of the loan due to interest. Generally, lenders will give you multiple options for terms and rates. Consider speaking with your financial advisor to determine the best option for you.
3. Reduce Interest Rate
Many lending agencies stress lower monthly payments as the major benefit of debt consolidation in their marketing, but what really makes a difference is the reduced interest rate. This is particularly true for credit card debt.
Interest rates for credit cards commonly hover between 20% – 24%. On top of that, card issuers typically compound interest, meaning they add your interest to your principle, and then charge interest on the new, higher amount moving forward – basically, they charge interest on top of interest. This can cause your credit card debt to snowball if you carry a balance on your card.
Debt consolidation allows you to take out a new loan with a lower interest rate. So even if your new monthly payment is the same or close to what you are paying now, you’ll most likely experience significant savings in the long with a lower interest rate. And since Hippo Lending is a commercial lender, loans through us may be eligible for certain tax benefits.
4. Fewer Strings
Debt Consolidation for a personal loan through your bank is a great option for those who qualify. Unfortunately, most banks require collateral in the form of home equity or a 401k, which disqualifies many. And those who do qualify face putting their personal property or hard-earned savings at risk. This reverses the time and effort spent paying toward those assets and also limits the individual’s ability to borrow against them in the future. At Hippo Lending, we offer financing based on your income and credit history. We do not require you to put up your savings or assets as collateral.
5. We Won’t Harm Your Credit Score.
Taking out a loan can be a stressful endeavor because most companies will do a hard credit check to determine whether you qualify. That means your credit score takes a hit before you even know what they will offer. Hippo Lending does things differently; we only make soft credit inquiries that do not affect your credit score. Beyond that, since we are a commercial lender, a loan through us will not show up on your personal credit history, meaning your score isn’t affected.
Keep Your Financial Independence
Here’s a question you might be wondering about: Why get a loan from Hippo Lending rather than a bank? Well, since we only serve medical professionals, we can offer you funding options that others can’t. We’re also smaller than many other lenders, meaning we have more flexibility. Our Member Advisors take time to tailor your loan to suit your needs.
The name ‘Hippo Lending’ was inspired by the Hippocratic Oath. We are dedicated to helping, not harming, the physicians who rely on us for the funds they need. Our Member Advisors take the time to discuss your best financing option. Sometimes that means a higher interest rate with a shorter repayment term. For others, it means adjusting the loan amount. Occasionally, we even recommend that doctors search out financial solutions through traditional banks if we think that is the best option for them. With Hippo, you can rest assured that we will find the best option to simplify your finances and save you money. Hippo has many different types of loans all tailored to your specific needs.