Personal loans are an excellent financing option in monetary emergencies that borrowers can use to fund their wedding, vacation, education, home improvement projects, or take care of medical emergencies. Financial institutions do force the usage of personal loan.
A personal loan also aids in the consolidation of debts. The loan amount closes multiple debts with a single EMI. Multiple loans tend to become burdensome over time. Tracking several instalments is bothersome, and in case of a miss in the repayment of even a single EMI attracts penalties. A debt consolidation loan simplifies the financial outgoings of the borrower through a single payment process. The borrower no longer has to track different loan EMIs and is responsible for back the borrowed loan principal and the interest in equated monthly instalments for the duration of the loan tenure.
The borrower has to return the cumulative borrowed amount of all the debts together but in a single instalment. A personal loan debt consolidation is a viable option because of the following reasons:
Single EMI: After consolidating multiple debts, the borrower has to take care of only a single EMI payment which is easier to track and manage. Lenders offer a personal loan EMI Calculator on their online portals that calculate the EMI based on the loan amount, interest rate, and loan tenure.
Lower interest rate: Multiple debts with different lenders often incur a high-interest rate when added cumulatively. A personal loan is available at low interest with a good credit score and repayment history. The total cost of the loan gets reduced with a low-interest rate deal.
Fixed loan tenure: A personal loan is available for 1-5 years. Borrowers can get rid of their liabilities quickly if they go for a personal loan for a loan duration within which they can repay the borrowed amount.
A personal loan debt consolidation comes with the following features:
- Personal loan applications are quickly approved. The lenders verify the documents and disburse the loan timely.
- One can apply for a personal loan through the online portals of banks, NBFCs, and financial institutions. Fintech companies like LoansJagat offer a comparative platform wherein the borrowers can compare over 40 lenders for their offerings on the loan amount, interest rate, processing fees, pre-payment charges, loan tenure and EMI to choose the one which best suits them.
- Personal loans are unsecured and don’t require any collateral or security to be attached.
- Personal loans are flexible and allow pre-payment to wind off the loan quickly.
But, before one considers a personal loan for debt consolidation, it is advisable to keep the following aspects in mind.
- Don’t opt for debt consolidation if repayment is possible in a short time.
- The credit score determines the interest rate offered on a personal loan. If the borrower has a low credit score, it is not advisable to shift to a single EMI payment. A personal loan is advisable if one gets a low-interest rate deal.
- Different lenders have different eligibility criteria. To avoid rejection of the loan application, the borrowers must check and compare lenders for their eligibility criteria.
- Different lenders offer different interest rate deals varying from 10.99% per annum to 24% per annum. To grab the best offer, compare before zeroing on the lender.
- Personal loans have short loan durations. When opting for debt consolidation, make sure that you can pay off the loan amount in the chosen loan tenure.
Personal loan debt consolidation minimizes the debt burden. Get a personal loan in Bangalore at the click of a button. Weigh the pros and cons of personal loan debt consolidation before opting for one.