What Is Debt Consolidation? How Can A Personal Loan Help?

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.

Some of the methods to consolidate debt include:

1. Home Equity Loan – here you borrow equity by pledging your house as collateral.
2. Credit Card Balance Transfer – here you get a new credit card to repay an older debt.
3. Personal Loans – These are unsecured loans, meaning you don’t require any collateral to avail this type of finance. You don’t need to predefine a purpose to take this loan, which is why it can also work as a debt consolidation loan.  

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 minimize 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 a 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.

Additional Read:  Struggling with Costly Credit Card Dues? Consider shifting to Personal Loans

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 Tata Capital. We offer customized personal finance that can work as a debt consolidation loan. You’ll find our interest rates to be competitive and our repayment tenures flexible. We ensure speedy loan processing, thanks to our online loan application system.

All you have to do is head over to our website and apply for any type of loan you want, and this includes a personal or debt consolidation loan. You can also apply for the same over WhatsApp. Once our financial experts approve your application, the funds are disbursed into your loan account within a matter of days.

Since we offer unsecured personal finance options, you don’t need to submit hefty paperwork. With minimal documentation and a basic credit history, you easily qualify to apply for personal or any other kind of loan with us.  

Safe to say, 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!