Did You Know?
We serve loans, the best way you can borrow
Unpaid debts can become an overwhelming financial burden, leading to a stressful lifestyle. Whether it's a past credit card bill, money owed to family members, or even payment for rent, it is essential to take care of any liability on time. Huge debts can lower your CIBIL score, so paying off loans with manageable monthly EMIs is advisable instead of allowing them to pile up and increase interest rates.
Debt consolidation loan will let you combine multiple debts and lines of credit into one loan, thereby streamlining your finances more effectively. Consolidating several debts into just one repayment plan makes tackling those payments much more manageable and saves time in the long run.
Consolidating your debts into one manageable payment may seem intimidating, but it need not be. With a proper understanding of your financial situation and a clear plan, a debt consolidation loan is achievable and likely more beneficial. Keep reading to know if debt consolidation is the best solution for your case and learn all its ins and outs so that consolidating debt won't feel out of reach anymore.
Debt consolidation is a way of using financing to cater to your other debts. If you have multiple debts, you can apply for a personal loan to consolidate them all into one. This will allow you to pay only one loan instead of many debts at higher rates. It is also easier to keep track of the debt this way rather than having multiple ones.
Consolidating your debt can be a great way to reduce the overall cost of what you owe because it can provide lower rates. Moreover, it is the best way to simplify your bills; instead of dealing with many lenders, you only have one to deal with. As long as you don't take on other debts, you can pay off your debt faster.
If you wish to consolidate your debts, there are numerous approaches. You can apply for a personal loan, home equity, or even a credit card and then use that money to pay off other smaller loans. To pay off other credit card debts, you can transfer the balance from your old card to a new one. Using this strategy of transferring balances will allow you to combine expenses and make it easier to repay the debt.
You may also read this: Reasons to apply for a personal loan
You may come across financial troubles in your life when bills pile up from different places at once. You check your wallet and worry about juggling multiple payments with different due dates. Personal loan for debt consolidation offers a lifeline when you feel underwater with financial obligations.
The path to freedom starts by combining all those scattered payments into one manageable monthly amount. Your credit cards, medical bills, and store accounts merge together under one roof. This single loan creates breathing room in your budget and helps lower those sky-high interest rates eating away at your money.
You gain control over your finances again without constantly checking which bill needs paying next. The right loan turns financial chaos into calm and helps rebuild your credit score over time.
Financial burdens weigh heavily on your shoulders when debts multiply from several sources. You deserve peace of mind without sacrificing your daily needs or future goals.
Consolidating debt can be a good way for anyone looking to manage their debts better. You can get funds and control your multiple debts from personal loans online, balance transfer credit cards, and other consolidation tools available from banks or NBFCs. You will now have only one loan to repay in monthly installments.
Consolidation not only simplifies the task of budgeting but also allows for accurate tracking. With a single payment every month, you won't have to worry about multiple invoices with various deadlines. This makes budgeting your finances easier since you know exactly how much money you need to set aside.
Consolidating debts makes them more affordable. However, make sure you get a good loan interest rate. You can use an interest rate calculator from the lender to know the loan estimate. Furthermore, consolidating your debts will reduce the monthly payments since the debts will be spread over a longer period.
You may also read this: Circumstances when a personal loan helps
Debt consolidation loan usually offer lower interest rates than individual loans, which means you can pay with extra monthly payments and finish your debt sooner. This will save you money in the future and put less strain on your finances now.
Debt agreements are contracts between a borrower and lender that clarify the amount of money one can borrow. Moreover, this agreement also stipulated you can use the loan amount to pay your outstanding debts. The agreement requires you to repay the loan in a specified time; otherwise, penalties will apply. Signing a debt agreement guarantees loan security and helps prevent the mishandling of borrowed funds. It’s essential to adhere strictly to its terms so that repayment can be completed swiftly without any issues.
When consolidating your debts, you are restricted from applying for additional loans. Otherwise, the repayment process could lead to an endless cycle of borrowing more money that is difficult to pay back.
It is more difficult to get out of debt than to accumulate it, particularly if you’ve amassed a big balance with an exorbitant interest rate. It could take a full decade or more to pay off the debts. As such, individuals are turning towards debt consolidation loan to help pay off their debts faster.
Before consolidating your debt, know that there are a few advantages and potential drawbacks that you should consider. However, since each individual’s financial situations differ greatly, it is always recommended you get a financial advisor who can ensure your particular needs are addressed before proceeding further.
Below are a few scenarios that could indicate that consolidating your debts would be the right move for you.
Consolidation involves combining multiple things into one and debt consolidation, in particular, is a process of combining your various payments into a single monthly payment. If you are struggling to pay off your huge monthly bills, take this as your cue. Debt consolidation takes all your bills into one, helping you feel financially organized and not agonizing over how to evenly divide your income among all payments.
If you apply for a debt consolidation loan, the lender will offer you a certain amount, and once approved, you get your funds. Consequently, rather than making multiple payments every month, you only have one loan to take care of.
High-interest rates can make your journey to financial freedom slower, particularly when you have multiple bills and can only pay the minimum balance due each month. When you make the minimum payment each month, it likely goes towards the interest rather than reducing your principal debt. Consequently, you keep accumulating more and more interest charges every single month.
When consolidating debt, one significant benefit is the possibility of obtaining a loan at a lower interest rate. This could save you hundreds, maybe even thousands of rupees. Even though the interest you get may be slightly lower than the current one, it's still better than none. Even a small percentage of a single monthly payment can help you save money and have more control over your finances.
Debt consolidation may quicken the process of paying off debt, but it won't necessarily guard you against cycling in and out of debt. After you get out of debt, you may still find yourself falling back into your old, unhealthy financial habits, which will eventually accrue more debt. Or, when paying the consolidation loan, you may continue overspending on the credit cards you are paying for. This means you will get stuck paying back your loan as you make monthly payments on the credit cards all over again.
To ensure you don't fall into the same debt pitfalls, it's essential to determine what caused your financial strain in the first place. Debt consolidation loans are the best tool to manage high-interest payments and reduce debts, but investing time in understanding how you got there is just as crucial for avoiding repeating these patterns. Create a plan to help you increase your chances of having a successful debt consolidation journey.
You may also read this: Smart way to use credit cards
Before you apply for debt consolidation loan, you should assess your needs and compare them to your long-term goals. Consolidating your debts will save you money and organise your monthly payments. However, there are some downsides worth mentioning:
Consolidating debts by taking out a personal loan can be beneficial if you're finding it challenging to manage multiple repayments; however, there are some key factors to consider before taking the loan.
Debt consolidation loans can be a good solution for borrowers who want to combine their debt obligations into one payment. However, before you take a loan to consolidate your debts, it is essential to understand everything about it.
Credit card balances with high interest crush your monthly budget most severely. Personal loans from banks eat away income with rigid payment terms. Payday loans trap you in cycles of growing debt that never seem to end. Medical bills arrive unexpectedly and pile up fast.
Store credit accounts tempt with easy purchases but sting with hidden fees. Educational loans linger for years while interest compounds daily. Auto loans with poor terms drain your resources month after month. Debt consolidation loans eligibility hinges on having these types of unsecured debts.
Your credit score might dip temporarily when lenders check your history during application. Closing old accounts after consolidating can lower your score briefly by changing credit utilisation ratios. Making regular payments on your new loan builds a positive history over several months.
Payment consistency matters more than anything else for long-term credit health. Missing even one payment on your debt consolidation loan hurts worse than before consolidation. Your debt-to-income ratio improves immediately after consolidation, boosting your score gradually. Credit bureaus view consolidation positively when it leads to responsible repayment behaviour.
Secured debt consolidation loan options require assets like your home or car as backup protection. Unsecured consolidation loans need no collateral but demand higher credit scores for approval. Your home equity serves as collateral in home equity loans used for debt consolidation.
Risk exists with secured loans because your property could face foreclosure after missed payments. Financial institutions often prefer offering secured options because their risk decreases substantially. Your valuable possessions stay safe with unsecured consolidation despite higher interest rates. Personal circumstances determine which option makes sense for your financial situation.
Wondering how can I get a debt consolidation loan? It all starts with gathering these documents before applying. Your income needs stability with verifiable proof of regular earnings for at least six months. Credit scores above 640 open more doors though some lenders accept lower scores with conditions. Debt-to-income ratios below 50% show lenders you can handle the consolidated payment amount.
Employment history proves stability to lenders evaluating your application for debt consolidation loan. Bank statements from recent months reveal spending patterns lenders examine closely before approval. References from current creditors sometimes help borderline applications get approved faster.
Balance transfers work best for credit card debt when you qualify for low promotional rates. Debt consolidation loan handles multiple debt types while balance transfers only address credit cards. Your total debt amount matters because balance transfers typically have credit limits under ₹5 lakhs. Time factors play a role since balance transfer promotions usually expire after 6-18 months.
Interest rates after promotional periods often exceed those of fixed consolidation loans by several points. Balance transfers require excellent credit – while consolidation loans accept wider credit score ranges. Your specific financial situation determines which option delivers more savings over time.
Online applications take about 30 minutes with basic financial information and identification documents ready. Approval decisions happen within hours for straightforward cases with good credit histories. Document verification requires 1-2 business days as lenders confirm your income and identity claims. Fund disbursement occurs within 24 hours after final approval with most digital lenders today. Your existing creditors receive payments within 3-5 business days after your debt consolidation loan funds arrive. The entire process completes within one week from application to debt payoff.
Download our personal loan app to apply for a personal loan. Get up to 2Lakhs* as a personal loan. Download Now!
Sign into avail a personal loan up to ₹ 2,50,000
Unifinz Capital India Limited is a Non Banking Finance Company (NBFC) registered with the Reserve Bank of India (RBI). lendingplate is the brand name under which the company conducts its lending operations and specialises in meeting customer’s instant financial needs.
