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Personal Loans for Debt Consolidation: Need to Know

Personal Loans for Debt Consolidation: Need to Know
Written by Zimmy

Personal Loans for Debt Consolidation: Need to Know: The ability to consolidate two or even more unsecured or secured debts to create the form of a new personal loan by debt consolidation. This allows you to avoid having to track and pay EMIs for your current loans in separate installments. In reality, making one installment to the personal loan of your choice will allow you to pay off all of the debt obligations.

Read on to learn how you can profit from the personal consolidation of loan debt.

The Benefits and Features of a Personal loan for debt consolidation:

The advantages and features are as the following:

* No collateral-free loan: You don’t have to mortgage any property to qualify for new personal loans for consolidating your existing debts.

* Flexible Repayment You are able to choose the repayment period for your loan between 1 and 5 years taking into account your potential repayment.

“On-time approval”: A smooth online application and flexible document procedures allow you to get approval for this credit line without delay.

* Instant Disbursal: The loan is paid immediately following the approval is granted.

Prepayment options available Many financial institutions provide loans with prepayment options. It allows you to pay off the debt before it gets to you which can save you a lot of interest expenses.

• Online application facility: You are able to effortlessly apply online for this loan from the comfort of your own home.

The advantages of choosing a personal loan to Consolidate Debt:

The advantages of using the personal loan option to consolidate debt are the following:

* Lower Interest Rates Business loans and debts that are derived from credit cards come with a higher interest rate than personal loans. When you combine them into an individual loan you are able to lower the amount of interest you pay and cut down on your total borrowing expenses.

* One EMI for all loans There is no need to pay EMIs in separate installments for all loans. Instead, you pay one EMI that is simple to track and manage.

One Loan Tenure A single loan repayment term allows you to easily plan the repayment process and consolidate all loans.

Factors to Take into Account Before Choosing a personal loan for Consolidation of Debts:

It is important to consider the following aspects prior to applying to consolidate debt:

Make sure to check Your Credit Score

The credit score has a significant influence on the interest rates paid by a debt consolidating financial firm. This is why you should try to decide on debt consolidation if you have a strong credit score.

If your CIBIL score is less than 750, you should provide all income sources in writing to banks. Alternately, you could apply for a co-borrower that has a CIBIL score higher than 750. This will allow you to get the debt consolidation loan easily.

* Examine the possibility of extending the repayment term of existing debt

Before deciding to consolidate debts make sure you know the repayment term of the loans you have in place. If the term of the current loan is nearing its expiration and you believe that you will be able to pay back your loan in full then there is no reason to consolidate debt.

* Review The Eligibility Criteria As Set By Financial Institutions

Eligibility requirements differ greatly from one lender to the next. It is therefore essential to be sure that you meet the criteria they’ve set in order to be eligible for debt consolidating.

* Compare the interest rate and additional Charges

Prior to deciding on the right financial institution to consolidate debt be sure to check the different interest rates provided by various financial institutions. In addition, you should also take into consideration the additional fees that lenders levy for processing charges, like stamp duty. This can help reduce the amount you borrow.

* Loan repayment Tenure after Debt Consolidation

It is also important to make sure that your financial institution has sufficient time to pay back the consolidation personal loan. If you have a shorter term the installment amount will be greater, which makes it more difficult for you to pay it back.

It is possible to use an online personal loan calculator to find out if the repayment term will give you the ability to manage your EMI. By mentioning the rate of interest as well as the loan amount and the duration, you can calculate the EMIs.

Personal loan for debt consolidation Balance Transfer

The choice between the two options of debt consolidation and balance transfer isn’t an easy decision when it comes to deciding an option for loan repayment. Both options have advantages and can be effective in various scenarios. You could opt for a balance transfer if you’ve taken out a single loan with a higher interest rate.

However, If you’ve had multiple loans in the past then you should consider debt consolidation so that you are able to make only one EMI payment. It is now easier to keep track of the repayment status. Thus, it’s recommended to select the most suitable option, ensuring it is the best for you.

If you now have an idea of all the advantages that a private loan can bring to debt consolidation, it is time to assess your situation and make an application for the facility if it is required. But before you decide to apply for it, make sure you compare the rate of interest and loan terms that different financial institutions offer to find the most affordable deals.

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Zimmy

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