When faced with large amounts of debt that’s threatening to snowball out of control, it may make sense to consolidate all of it and tackle all of it in one go. The idea behind debt consolidation is that you pay off all outstanding dues with one loan at a lower interest rate and thereby ease the stress on your finances.
For instance, if you have one or more credit cards, a car loan, a gold loan or other financial products that form a significant outlay every month, you have the option to consolidate them with a collateral-free personal loan. Instead of different loans charged at variable rates of interest, you borrow a single loan and repay all pending dues in one go.
In doing so, not only do you keep your debt in check and avoid late payment charges, but you also bring your finances back on track by having just one manageable EMI to tackle every month.
Read on to know how an unsecured personal loan can help you consolidate your debt.
1. Get a large sanction without pledging any collateral
As an unsecured borrowing option, a personal loan allows you to consolidate your debt without having to worry about identifying a valuable asset and worrying about its status. As lenders offer higher ticket amounts – some offer loans up to Rs.25 lakh – you can be sure of availing the amount you need without the headache of pledging something of value.
2. Pay off your new debt at an economical interest rate
Pending dues often attract additional charges and hiked interest rates. When put together, these cause the annual cost of your loans to skyrocket as you go on incurring interest. Further, if paying your current debt is a problem, then the additional fees only make it tougher. By consolidating your debt with a personal loan, you get rid of penalty charges and high-interest borrowings and only need to repay your present loan, that too at a cost-effective rate.
3. Channelize your finances towards just one EMI each month
When you consolidate debt with a personal loan, you get the convenience of bringing down all your previous debt payments into a single EMI. With less payment dates to keep track of and fewer EMIs to pay, you can manage your finances better and arrange budgets so as to redirect all your financial inflow towards clearing one EMI a month, diligently.
4. Lower your EMIs by opting for a long tenor
Not only do you get the benefit of paying just one EMI, but you can reduce your monthly burden by choosing a long tenor. Lenders like Bajaj Finserv offer you tenors ranging from 12 to 60 months, thereby giving you the freedom to either be aggressive with repayment or ease the immediate strain on your finances. As a rule of thumb, it’s best to select the shortest tenor you can manage as this keeps your interest payments to a minimum. Use an EMI calculator to determine how much you can manage.
5. Make part-prepayments at minimal extra charges
Once your financial health increases and you have surplus finances at your disposal, make prepayments to reduce the overall cost of your loan. When you make a prepayment, you clear a portion of the principal before its regular due date. While this convenience may come at a fee, the financial benefits are considerable in the long run.
6. Choose a Flexi personal loan to enjoy a range of powerful features
One way to side-step prepayment charges is to avail a flexi personal loan by Bajaj Finserv. This type of personal loan works well if you need funding for a number of causes, debt consolidation included. The advantage of a Flexi loan is that you can access higher amounts, from which you can borrow as per your needs, in parts. Further, with a flexi loan, you get the facility of paying interest-only EMIs for the initial tenor. This feature reduces the monthly cost of your loan by up to 45% and lets you take back the reins of your finances one step at a time.
Finally, personal loans offer straightforward application procedures followed by speedy loan disbursals. So, if you feel that a personal loan can tip the financial scales in your favour, start the debt consolidation process right away.
Bajaj Finserv, one of the most diversified NBFCs in the country, offers easy Personal Loans for Debt Consolidation, where you are assured of a sanction large enough to tackle all your pending dues. Check your pre-approved offer from Bajaj Finserv and get instant approval through a customised loan deal today!
The following article is an initiative of Bajaj Finserv Ltd and is intended to create awareness among readers
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