How can you get Financial Benefits from a Debt Consolidation Loan?

How can you get Financial Benefits from a Debt Consolidation Loan?

Debts are a “constant noise in the head” and a “burden on your finances.” There are situations when you may have multiple loans and debts to clear at a given time. You might end up paying elevated interest rates and recalling each detail of every debt that you owe to the lenders. To get rid of this terrific chaos, several NBFCs offer you debt consolidation loans. This is like a single debt that dissolves all your current debts to ease your payments. Apart from the peace of mind, there are several financial benefits of debt consolidation loans.

Lower Interest rates

Several personal loans and credit card interest rates go as high as 29.5% per annum. Paying these skyscraping interests individually for all of these debts, you might end up paying considerably high interest. And the situations get worse when you miss a payment, and the lenders charge you extra interest. This will result in ever-rising debts every month. But when you choose to pay all these debts at one go with a debt consolidation loan, the interest will only be limited to that for a single loan. The interest rates for these loans begin from 8.9% per annum.

Lower risk of collateral reclamation

In order to exempt yourself from higher interest rates on the loans, you might have also opted for collateral loans. Here, your assets are with the lender as a security to the loan amount. Such loans are always advisable if you have the surety to repay them timely without fail. If you fail to make loan repayments as per the terms and conditions, you might end up losing your asset. In such a scenario, debt consolidation loans can help you save your financial treasure, i.e. the asset. And lower interest rates are always an added advantage.

Less monthly burden of debts

When you have to pay multiple debts at a time, all the EMIs pile up and add to your monthly debt repayment cost. But when you opt for a single loan to pay all the EMIs, your repayment tenure will increase, and your monthly EMI will decrease as it will be distributed uniformly along with the tenure. This will help you efficiently manage your monthly finances and divert them to your assets or development for better growth.

Improved credit score

Multiple debts and failure in paying even a single debt completely can have a bad impact on your credit score. With a lower credit score, it becomes difficult for you to avail loans in future. But if you chose to pay all of your debts using a consolidation loan, you can build a good credit history provided you can make timely repayments for this single loan. With high credit scores, your chances of applying for loans with lower interest rates in future increases. Moreover, you also get a high amount of loans approved and sometimes an opportunity to negotiate the repayment tenures. Lenders also provide exciting offers to potential borrowers with higher credit scores.

How to avail personal loans for debt consolidations?

NBFCs offer personal loans for debt consolidation at 45% lower EMIs. You get Flexi-interest only loans where the interest you pay is calculated only for the money that you withdraw every month to pay your debts. You get to know about the EMIs, withdrawals and interest amounts on the personal loan apps of the lenders. Here are some simple steps that will direct you to apply for this loan:

  1. Go to the website of the lender
  2. Check your eligibility for the personal loan for debt consolidation
  3. Apply for the loan
  4. Upload the required documents
  5. Get the loan approval
  6. The money you request each month will be deposited in your account without any delay.

If you have a credit score of 750 or above, the lenders might also send you pre-approved loan offers. You can apply for these offers whenever you need to consolidate your debts. These offers, apart from being pre-approved, have highly reasonable interest rates.

Stop allowing debts to burden your finances

Be smart while paying off your debts. Holding multiple loans at a given time drains your mental peace as well as your finances and sometimes your assets. And the impact on the credit score is another drawback. Debt consolidation loans are the best support in such a scenario. Ensure that the loan amount approved is solely diverted to paying off your debts. If you don’t use this loan wisely, you might end up digging a deeper hole for you in the future. You will not only raise your financial burden but also lose your creditworthiness in the market.

So, if you are tired of remembering and paying several debts at a time, check out for the debt consolidation loans. Also, don’t forget to research well before applying for the loan.

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