Thanks to the easy availability of loans, the dreams of many people are coming true—whether it’s a house or some latest gadget, loans make everything affordable. There are wedding loans and vacation loans as well.
Many people avail multiple loans at the same time. Needless to say, the cost of living is increasing every day, and so is the cost of the average person’s buying spree. Availing loans can help you live a comfortable and luxurious life, something you deserve for slogging in your office for more than ten hours at least five days a week.
If you’re someone who has availed multiple loans, debt consolidation is something you should consider. Debt Consolidation Loans reduce not only the stress associated with multiple loans, but also the total EMI that you pay every month.
Let’s take a look at this in detail.
What is Debt Consolidation?
Debt consolidation is, simply put, the refinancing of your debt, which involves taking one loan in order to pay off all the others. You can avail Personal Loans for debt consolidation as these come with better terms and rates. It usually results in lower monthly payment or lower interest rates and—if you’re lucky—you get the benefits of both.
A credit card consolidation loan is a type of Personal Loan that you avail in order pay off your credit card debt at one go. Credit card interest rates are usually high, and keep increasing over time. Personal Loan interest rates are much lower; availing one, you pay a much smaller interest amount.
How Does Debt Consolidation Works?
Let’s say you’ve taken three different loans—Personal Loan, car loan, and student loan of amounts Rs.10 lakh, Rs.5 lakh, and Rs.14 lakh respectively. You’ll probably end up with three different interest rates, as well as three different EMI amount that you’ll pay at three different times of the month.
Consolidate the entire amount into one loan, and you’ll make your personal accounting easier. By opting for a Personal Loan to pay off each of your debt and the outstanding interest, you’ll just have one payment to make each month at one interest rate, ideally lesser than the three individual rates.
Make sure to apply Personal Loans online at lowest interest rates to reduce your overall debt. You can make use of a Personal Loan EMI calculator to know the exact amount you need to pay every month.
Benefits of Debt Consolidation
The advantages of debt consolidation are many and some of them include:
- A relatively lower, and therefore better, interest rate
- A reduction in the overall debt amount
- Easier cash management
Opting for loan consolidation will also help you in budgeting, as there’ll be only one repayment that you’d need to make every month. You’ll have a clear idea as how much more you need to pay, and you’ll be completely debt-free.
How to Consolidate Debt?
When you’re applying for Personal Loans to consolidate debts, it’s crucial to look at the best Personal Loan interest rates in India. Taking a Personal Loan makes sense only if the interest rate is lower when compared to what you’re paying on your existing debt. This will help you to become debt-free faster.
Research online and check which bank or NBFC is offering the best rates in the market to ensure that you get the best.