Loans provide much-needed financial relief in times of financial emergencies. However, because of personal or family needs, an individual may take multiple debts from various lenders. Multiple unsecured debts are bound to cause anxiety and concern. Additionally, it is difficult to keep track of the EMI schedule of every loan. If you miss out on paying a single EMI, it is bound to affect your credit score negatively.
The solution to such multiple debts is a personal loan. You can consider taking an unsecured personal loan to consolidate all your loans and streamline your debts. It will help you to become disciplined with your debt repayments.
An unsecured personal loan is one for which collateral is not required. You get the loan based on several eligibility criteria including your CIBIL score.
We recommend using a personal loan eligibility checker to check your personal loan eligibility. It will help you to calculate the monthly amount you will have to pay towards your loan. It is a free tool available on lenders’ websites.
How Personal Loans Help in Debt Consolidation
There are multiple advantages to consolidating your scattered debts into one.
- Your existing loans can be expensive, especially if they are unsecured debts or credit card dues. If you miss paying a loan EMI or the credit card bill, it can lead to penalty charges and an increased interest rate. A personal loan from a trusted lender comes at reasonable interest rates that start at only 11.99% per annum.
This way you can swap your high-interest loans with a personal loan and save significant money every month.
- A single personal loan helps you trade multiple EMI due dates with a single EMI due date every month. It helps you stay relaxed and worry-free, and conveniently plan and schedule the payment of one EMI.
You do not have to struggle with multiple EMIs every month.
- A single EMI makes you more disciplined with EMI payments. You have to pay a fixed amount on a fixed date every month, which is easier to remember and schedule.
The chances of forgetting to pay an EMI reduce, thereby ensuring you are not facing penalty charges.
- If your debts keep mounting and you fail to pay even a single EMI on time, it will reduce your credit score. A consolidated debt in the form of a personal loan can help you build a strong credit score by making timely payments towards your loan.
A good credit score is essential to help you get loans in the future at favorable terms.
How Can You Consolidate Your Debts By Taking a Personal Loan
We have shared the steps you can take toward consolidating your debts with a personal loan:
Step 1: The first step to consolidating multiple debts is calculating the loan amount. You need to know the sum of all your outstanding debts. It is a good idea to check with different lenders to know if you are eligible for the loan amount.
Step 2: Next, check your credit report and credit score. Correct the errors, if any. You may find it tough to get a personal loan if your credit score does not meet the minimum threshold set by the lender.
Step 3: Take out time to study the terms and conditions of different lenders. Find the best lender offering the lowest personal loan rates and flexible repayment options and apply for a personal loan.
There are lending institutions like Fullerton India giving you unsecured personal loans for debt consolidation at low-interest rates and customized repayment tenures between 12 to 60 months. Follow the steps mentioned above and make sure you use the personal loan eligibility checker before applying for a personal loan to consolidate your outstanding debts.