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Anonymous
Anonymous asked in Business & FinancePersonal Finance · 2 months ago

Why would someone take out a loan to pay off debt?

12 Answers

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  • 2 months ago

    Lower interest rate. Borrowing at 2% to pay off 8% loan.

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  • 2 months ago

    Sometimes a loan can consolidate all your debts into one payment at a lower interest rate than your collective debts. Sometimes people are just idiots. It really depends on the situation. 

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  • Amy
    Lv 7
    2 months ago

    Lower interest rate.

     

    Principal is due.

     

    They just don't have the money right now (but can somehow get approved for the loan).

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  • Anonymous
    2 months ago

    mostly because they are trying to manipulate debt 

    lower interest is only valid if the time period and debt is a one to one

    consolidation loans are foolish and used often by con men and predatory loans 

    never ever do a consolidation loan 

    ---------------

    noting you did not say what the original debt was ? 

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  • Anonymous
    2 months ago

    Lower interest rate.

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  • 2 months ago

    Anyone claiming they do is conning themself. They RENAMED the debt. They didn't pay it off.

    If they can get a lower interest rate, and have changed the behavior that created the debt, it may make financial sense to do so.

    An example is that I recently had to finance the replacement of a 30 year old furnace. I am looking at the possibility of refinancing the home and rolling in the loan for the furnace. The remaining term of my mortgage is about the same as the term of the 'home improvement' loan. If I can get a lower total payment by combining the loans, I come out ahead in total interest.

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  • 2 months ago

    If you can get a lower interest rate to pay off a higher one, wouldn't you?

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    • john2 months agoReport

      Dear %0%
      CASH-NET LOAN INVESTMENT INT USA ,They offer all kinds of loans to pay your Bills within the range of a minimum amount of 3,000.00 ,$250.000.00 USD to a Maximum of 10.Million at 3% interest rate.Contact us with the email below via . lawwisebestserviceloan@gmail.com

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  • Judy
    Lv 7
    2 months ago

    lower interest maybe

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  • 2 months ago

    To save interest charges of course, and to simplify it.

  • 2 months ago

    If that loan has a lower interest rate.

    If someone borrows $4000 to pay off a $3000 card... yes they end up now $7000 in debt... but if that $3000 card has a whopping $90 interest rate per month... and the $4000 is a fixed payment with no prepayment penalty... if they're really careful and frugal and disciplined... they could get ahead of the curve... or they could go crazy and blow that $4000 and yeah... end up way worse than before.

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    • john2 months agoReport

      Dear %0%
      CASH-NET LOAN INVESTMENT INT USA ,They offer all kinds of loans to pay your Bills within the range of a minimum amount of 3,000.00 ,$250.000.00 USD to a Maximum of 10.Million at 3% interest rate.Contact us with the email below via . lawwisebestserviceloan@gmail.com

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