What is debt consolidation? It is combining accounts into one master account for repayments. Doing so reduces interests of varying rates. For unsecured loans such as education loans and credit card payments with high-interest rates, debt consolidation is a smarter approach as you can clear all such bills in one monthly payment. However, to take a debt consolidation loan is a decision one needs to make, based on CIBIL scores and collaterals.
People resort to various methods to consolidate debt. Some of them include:
- Home Equity Loan – here you borrow equity by pledging your house as collateral.
- Credit Card Balance Transfer – here you get a new credit card to repay an older debt.
- Personal Loans – These are unsecured loans, meaning you don’t require any collateral to avail this type of finance.
As you can see, the third option of personal finance is unsecured and these days available at low personal loan interest rates, which makes it breathable in terms of payments. But that’s not all! Here are a few more reasons why it’s advisable to avail personal finance for debt consolidation:
- Opting for personal finance empowers you to go for a higher principal to repay outstanding debts in one go, rather than pledging collaterals to do the same. This finance option is best if you want to make a big purchase without mortgaging assets.
- With a single Equated Monthly Instalment (EMI), you would concentrate and minimise payments compared to squandering money to never-ending debts. Before accepting a loan, you can calculate EMI using an online personal loan EMI calculator.
- You can make progress by seeing lesser debt amount. Taking a loan does reduce the credit score, but your score climbs back faster with every timely monthly payment. Remember, a higher credit score improves your personal loan eligibility.
- Flexibility in terms of time taken to repay is available. You can choose to repay in one year or ten years, depending on the terms and conditions mentioned by the lender. This also shifts the amount of the EMI to be paid according to your financial standing.
To sum up
Overall, a personal loan for self-employed or salaried professionals helps you in managing your finances smoothly. The application, approval and disbursal process, too, is done within a few business days, so you don’t have to wait too long for funds.
When you take personal finance, the end of the tunnel is in sight, and eventually, you break the vicious cycle of debt accumulation.
Additional Read: 5 Ways in Which Personal Loans Can Help You Save Money
Are you looking for the right lender for personal finance? Once you have made up your mind, take the step forward with TataCapital. We offer customised personal finance that can help with debt consolidation.
Our online application process for prospective clients establishes a hassle-free borrowing process. To know more about our personal finance options, log on to our website today!