Availing multiple loans isn’t uncommon these days. It is due to the easy availability of loans, that the dreams of millions are coming true. Most of today’s youth own an apartment, cards, the latest gadgets, and live a lavish lifestyle and all of this has been possible due to the easy availability of loans.
However, with the increasing cost of living today, paying so many EMIs and balancing the finances isn’t easy. The only solution to this is to opt for a debt consolidation loan. This is nothing but a Personal Loan that you can use to pay-off your outstanding dues. Let’s have a look at how it works:
What is a Debt Consolidation Loan?
You basically take a new loan to consolidate your previous dues and pay EMI to this single loan. This means that you just have one EMI to pay every month rather than paying several ones.
This will make managing money easier and the goal is to lower the interest rate along with the monthly payment and paying off the debt quickly.
Who should Apply for Personal Loan for Debt Consolidation?
A Personal Loan for debt consolidation is usually opted by individuals who have availed multiple loans like Home Loan, Student Loan, Personal Loan, multiple credit card dues et al.
Needless to say, managing several debts at the same time can be a daunting task. You can end missing a payment or even fail to pay the debt completely owing to high interest rate by not being not able to cope with the overwhelming debt.
How Debt Consolidation Works?
Suppose you have a Home Loan of Rs. 15 lakh, Personal Loan of Rs. 5 lakh, and Student Loan of Rs. 2 lakh in your name. You, now are, paying three different EMIs at three different interest rates. You probably as make the payment at three different times of the month.
By applying for a Personal Loan and consolidating all the three loans into one, you’ll make things, a lot easier. You can pay off your entire debt and the outstanding interest from one single account. You just need to make one payment, which ideally should be lesser than the consolidated amount of the three EMIs.
However, it is really important that you apply for Personal Loan with a low interest rate, and calculate the EMI that you’ll need to pay. You can use an EMI calculator for this purpose. Compare this amount with the total EMI amount that you need to pay for your multiple loans. Consider taking the new loan, only if you’re making a profit in terms of interest payout.
How to Apply for a Personal Loan for Debt Consolidation?
When you apply for a Personal Loan, you don’t need to give your lender specific reason for it. You can simply go to the bank and NBFC and apply for a Personal Loan. Personal online loan is also available and you can apply online.
Make sure to check eligibility before applying for a such a loan, so that your loan request doesn’t get rejected.
Once, approved, the amount will be credited to your account and you can use it to clear off your outstanding debts and interests at one go.
This surely will make managing your finances easier.