It is a financial quandary that many people battle: that of keeping track of multiple EMI dates every month. There is a simple solution: debt consolidation using a personal loan.
What is debt consolidation?
As the term suggests, it is an arrangement where existing debt is consolidated, or brought under, one borrowing. Debt consolidation is done by large corporates, but it is also recommended for individuals who have multiple loans to their name. This is done by borrowing an instant personal loan online from a loan app or traditional lender to close the other loans. Debt consolidation is a good practice because:
- It makes loan management simpler. Suppose you have a home loan, car loan and credit card loan to your name. Each will have different EMIs to be paid on different dates of the month. When you consolidate the loan under a personal loan, you only have one EMI to pay.
- Financial management becomes much more streamlined. The practice of debt consolidation frees up your income for other expenditure after deducting the personal loan EMI per month
- Instant online personal loans have shorter tenures than secured loans. Thus, debt consolidation using a personal loan makes you debt-free much faster.
- Your credit score improves when you borrow a personal loan to repay and consolidate multiple loans.
- Debt consolidation done properly makes it easier to get larger secured loans in the future.
Why go for a personal loan to repay debt?
Ordinarily, it is poor financial planning to take a loan to repay another loan. Doing so keeps you entrenched in debt. But a personal loan, with its shorter tenure and relatively lower amount, makes you debt-free faster. It can be borrowed for a maximum of 48 months for a maximum amount of Rs 5 lakh. You also have the choice to foreclose the loan earlier than tenure.
Instant personal loans are also easier to get – when borrowed from a leading loan app in India, it takes only a few steps, minimal documentation and hassle-free application processes to get the money disbursed to your account soon. Leading lending apps in India partner with the country’s foremost NBFCs to check credit and disburse the loan amounts.
How to get a personal loan
First, install the loan app on your smartphone. Ensure that you choose a leading, reliable loan app that is bug-free, has good user ratings and transparent application and payment processes.
- Set up the app and study the loan product in detail. Carefully study the eligibility criteria, interest rates, repayment terms, schedule of fees, penalties, documents required, etc.
- Apply for the loan when you need the loan, after you calculate how much amount you require. If it exceeds your loan eligibility with the app, you should desist from applying or contact the app to know how to increase your eligibility
- Study the app’s list of required documents. Make copies of the required documents and self-attest them. The set is picked up from your residence and submitted on your behalf to the branch office
- The app checks your personal and financial documents. When all is found correct, the app notifies you of loan approval. Do note that the app may also notify you of rejection, but this happens only in extreme circumstances (you do not have a source of income, you have recently quit your job, your document information does not tally, etc.) The best lending apps process the application even for those who are new to the lending universe
- From the next month, start repaying the loan in a series of instalments from your salary or business income
(ThePrint ValueAd Initiative content is a paid-for, sponsored article. Journalists of ThePrint are not involved in reporting or writing it.)