Repaying your debts can quickly become a stressful experience if you have limited finances and several debts in tow. But you can make your outstanding debts more manageable with a debt consolidation personal loan.
On top of being collateral-free, these loans are easy to secure, involve quick processing and are disbursed swiftly. This makes them the perfect financing option to settle multiple debts quickly. What’s more, these loans make debt repayment cheaper!
Wondering how getting an extra loan can help you save money while paying off debt? Take a look.
Three ways how getting a small loan can help you save money during debt repayments
#1 Savings on loan interest
If you have taken several loans, there is a good chance you’re losing significant money over loan interest on every loan. By consolidating your debts, you reduce your overall spending on loan interest. This is because you pay the interest for only one loan. What’s more, since the personal loan interest rates on these loans are nominal, you save even more money. Here’s an example.
Say you have borrowed personal finance of Rs. 1 lakh at a rate of 5% for five years and a two-wheeler loan of Rs. 3 lakh at a rate of 7% for five years; you’re paying about Rs. 69,749 on interest for the length of the tenure. However, if you get a debt consolidation loan of Rs. 4 lakhs at a 5% interest rate for five years, you’re only spending Rs. 52,910 on interest. That is about Rs. 16,839 in savings!
Want to save even more on loan interest? Negotiate with your lender for a better rate if you have a good credit score. A credit score above 750 points is typically considered good.
Additional read: 5 Ways in Which Personal Loans Can Help You Save Money
#2 Save on late payment fees
Another advantage of consolidating your debts with asmall personal loan? You pay only one monthly EMI payment on your debt. So, your repayments are not only more manageable but also easier to track. Naturally, you never miss out on loan EMIs and save considerable funds on late payment fees.
#3 Flexible EMI repayments: Choose EMI according to your budget
Of course, consolidating your debt with personal finance helps you pay your dues at a lower interest rate, which ultimately means affordable EMIs for you. But debt consolidation loans are known to have flexible repayment terms, meaning you can even choose a tenure depending on your EMI repayment ability. So, you never have to stretch your budget to pay off your debts, thereby making repayments all the more comfortable.
Need help choosing the right loan tenure? Use a personal loan EMI calculator and choose one that matches your repayment capacity.
Additional read: Tips to Save Money Through Personal Loans
Now that you know how you can save money while repaying debts using personal finance, why not make the debt consolidation process convenient by choosing a trusted lender? Turn to Tata Capital today. We have a quick online small instant loan application process and guarantee quick disbursals. The best part? We offer extended loan tenures along with flexible EMI plans!