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How to Pay Off Debt with Personal Loan

How to Pay Off Debt with Personal Loan

Managing debt can be overwhelming, especially if you have multiple debts from different lenders. Even a handful of missed EMIs can land you a severe financial ordeal and hurt your creditworthiness. If you have been wondering how to pay off debt? We have the right solution to help you manage your outstanding loans. The easiest way is to avail of a low-interest rate personal loan.

Why Should You Avail Personal Loans to Pay Off Debt?

Availing of personal loans to pay off debt allows you to consolidate all your debts into a single loan which has the following benefits:

1. One EMI for All Your Debts

If you have multiple loans from different lenders, you must keep track of multiple EMIs, which is challenging to do every month. It not only puts a constraint on your finances but skipping even one EMI can lead to penalties. But using a personal loan for debt consolidation allows you to club all your debts together, so you only make one EMI payment towards settling all your debts.

2. Flexible Repayment Tenure

Most financial institutions will offer you a personal loan for debt consolidation with fixed repayment tenure of up to 6 years. But they also allow borrowers to avail of flexible EMI options. So, you can initially pay lower instalments and gradually pay more throughout the loan’s repayment tenure.

3. Low-Interest Rate Personal Loan

When you have multiple loans to repay, you not only pay multiple EMIs, but you pay them at different interest rates. So, you may pay a higher amount in the long run. However, by consolidating your debts, you only have to pay EMIs at a fixed interest rate lowering the amount paid as interest in the long run.

4. Pay Off Credit Card Debt

You can obtain a personal loan to consolidate all kinds of debts, including credit card debts. If you are an avid credit card user, you can accumulate significant debt over time. Also, if you fail to repay the balance on your credit card on time, you will attract penalties. But a personal loan will help you pay off your credit card debt in a single instalment to avoid additional penalties.

How to Pay Off Debt Using Personal Loan?

Below are the steps on how to pay off debt using a personal loan:

1. Calculate Your Total Debt and Plan Your Repayment Strategy

Before applying for a loan, you must calculate what you owe. It will help you get an idea of how much amount you need to borrow. At the same time, it will help you estimate the amount you will pay in instalments and the ideal tenure to repay the loan.

2. Apply for a Personal Loan and Estimate Costs

Once you know how the amount you need to borrow, it is time is shop around for personal loans. There are countless lenders in the country who offer personal loans for debt consolidation, so you need to compare your options. Consider factors like interest rates, repayment terms, and additional charges before opting for a loan from a lender.

3. Use the Funds from Your Personal Loan to Pay Off Debt

Now that you have funds in your bank account use them to repay your existing debt. It is important to note that failing to repay your debts, even after availing personal loan for debt consolidation, can negatively impact your creditworthiness. So, you must stay disciplined and use funds only to repay the debt.

Wrapping Up

A personal loan can be an excellent debt consolidation tool, allowing you to become debt-free sooner. Getting a personal loan for debt consolidation is even easier with Tata Capital. We offer low-interest rate personal loans of up to Rs 35 lakhs. You do not need to pledge collateral, and we do not charge any pre-payment charges. Visit our website to know more. 

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