A personal loan could help borrowers deal with the debt that’s currently overwhelming them. It is also possible to consolidate current outstanding loans into one and manage the instalments with ease. You can get a loan for the purpose of debt consolidation and put an end to worries of remembering to pay different Equated Monthly Installments (EMIs), as well as different payment dates. With debt consolidation, you can combine more than one debt into a new personal loan with a favourable interest rate and repayment tenure.
The amount received from your new online personal loan is used to pay off the outstanding debts. A debt consolidation loan is a big loan that you take to pay small debts. With a loan, you can manage to save on the expenses related to the interest and the cost of finance. Let’s have a look at some of the ways that a new loan might help solve existing debt problems.
Personal Loan Can Help Reduce Interest Charged on Debts
In times where you require financial assistance, you might consider opting for credit cards or payday loans. Unfortunately, as soon as you’ve taken on high-interest debt, paying it off can be a tedious task. With many of these types of debt, the interest and fees charged on loans can be so expensive that you’re making huge monthly payments and barely reducing what you owe, if you qualify for a new personal loan at a lower rate of interest.
Reduce Your EMIs On Existing Debts
- You can easily make your debt cheaper with the help of a loan, but it can also lower your monthly payments in the following three scenarios:
- If you can lower your interest rate. When you’re charged with a low-interest rate, less money is required each month to cover the interest costs. As a result, your total monthly payment may be lower, even if you keep the same repayment timeline.
- If you can extend your repayment deadline. If you give yourself more time to pay off a debt, you’ll be paying less each month toward what you owe. Be aware that this approach can raise total repayment costs, even if you’ve reduced the interest rate on your debt because you’ll be paying that interest for a much longer period. Still, if you can’t afford your monthly loan repayments, then a loan would help to bring them within your budget.
- If you can pay off multiple creditors. If you owe many debts each debt will most likely have its own minimum monthly payment. If you take out a loan to pay off multiple existing debts, your single monthly payment may be less than the sum of the other minimum payments.
Prevent Paying Fees With Personal Loan
If you have maxed-out credit card limits and are unable to repay them, you will get charged with over-the-limit and late fees. If you’ve taken out payday loans and need to keep doing so to pay them back, you could end up paying fees on each new loan. A loan could help you stop getting charged with these fees frequently. Many lenders offer personal loans with no origination fees, application fees, or other upfront fees. With a loan, you can pay off your loans, debts, and then just work on paying down your new debt.
Eligibility For A Personal Loan
To avail a loan you need to be eligible for the same. You need to meet the basic loan eligibility criteria for an instant loan
- You need to be an Indian citizen to be eligible for the loan
- You should be a salaried individual to be able to provide proof of your credit
- You need to be between the ages of 23-58 years to apply for a loan
- A good CIBIL Score will showcase your financial ability to repay the loan amount.
- There should be no outstanding amount on your credit card or other existing loans.
Documents Required
Loan documentation consists of your personal information to understand your financial credibility as a salaried or self-employed individual and release your loan amount as soon as possible. Given below is a list of documents required for a loan
- Submit proof of identity, like a PAN card, Aadhar card, Voter’s ID card, and driving license.
- Proof of residence like Electricity bill, Gas bill, or Leave and License Agreement.
- Documents such as bank statements for the last 3 months. This helps in calculating the borrowers CIBIL Score, credit history and overall creditworthiness.
- The applicant will also need to provide your salary slips of the last 3 months
- Passport size photographs
