Debts can take a toll on your finances as well as hamper your short and long term financial goals. If you have a lot of high-cost outstanding debts, the rising EMIs and interest rates can prove to be financially burdensome. In order to safeguard yourself from the vicious cycle of debts, you can consider availing a lower-cost, long-term Personal Loan for debt consolidation.
So what is debt consolidation?
With multiple debts to clear, keeping a tab on the different interest rates, loan terms, or the payment date can be a tedious task. However, with the help of debt consolidation, you can combine all these different payments into one single payment with a fixed interest rate, a fixed term, and a single payment date. Opting for debt consolidation will help you be organized, thereby enabling you to manage your finances in a much better way.
By availing a personal loan, you can consolidate your debts and pay off all your other loans in a much easier way.
Below are some of the major advantages of availing a personal loan for debt consolidation:
Single EMI payment
- Consolidating your debt with a single personal loan will help you structure your EMIs. You don’t have to keep track of the various EMI dates, or worry about penalties in case of delayed EMI payments. Making a single EMI payment is certainly easier than paying several EMIs every month.
- Availing a Personal Loan for debt consolidation will allow you to consolidate all your EMIs into a single EMI.
Debt consolidation for Credit Card debt
- Though credit cards are highly convenient for instant cash requirement, they aren’t a viable option due to their high interest rates. Moreover, if you fail to pay off your credit card dues on time, you will have to pay penalties.
- Therefore, instead of using revolving credit on your cards, you can consider opting for a personal loan that allows you to pay a lower interest rate on your debt.
- Another advantage of a personal loan is that you can repay it in easy EMIs over a period of time.
Fixed Repayment Tenure
Financial institutions usually offer a loan repayment tenure between 1 year and 5 years for personal loans. Knowing the EMI amount and loan tenure can help you plan your finances and pay off your loan without any hassles.
Before you avail a personal loan for debt consolidation, you should carefully evaluate all your outstanding loans. You should have detailed information about the loan amount, interest rates and repayment terms of each of your outstanding loans.
Compare your total debt with your monthly income to assess your current financial situation. This way, you’ll be in a much better position to avail a personal loan for debt consolidation.
Make sure that you settle for a financial institution that offers a personal loan at the most competitive interest rate. Lastly, do not forget to read the terms and conditions of the loan agreement carefully before signing it. This will help you avoid any inconvenience in the later stage