Individuals may avail multiple loans over their lifetimes, and rightly so as these financing avenues allow them to make the purchases of their liking and make necessary expenses. For instance, one may avail a loan for bike purchase, for travel bookings, for home renovation, for higher education, or even for business investment and expansion. If the individual’s finances remain suitable for accommodating repayments, lenders today approve these advances easily too.
Sometimes, however, multiple loans may be running simultaneously and the borrower may have to make repayments for. In this scenario, the need for debt consolidation may arise. And what better way to consolidate your debts than through a personal loan?
Several reasons concur why one should choose to consolidate their debts with this advance, which we shall learn about in this article. But, before that, let’s first check what is debt consolidation and why it is important.
What does debt consolidation mean?
Debt consolidation is a process that allows individuals to convert multiple small debts into one. So, what exactly happens in the process is that a borrower servicing multiple debts simultaneously borrows a loan of a higher value and pays off the previous advances in full with the amount so availed.
As a result, the multiple debts are converted into one and the borrower needs to repay only one debt now than multiple ones. As for personal loans, these advances can serve just right in enabling the conversion of multiple such smaller debts into one for various reasons. Let us first know why you should go for debt consolidation.
Why Should You Consolidate Your Multiple Small Debts?
Various important reasons command why you should go for the consolidation of multiple small debts in one.
a. Conversion of multiple EMIs into one
Consolidation of multiple debts into one also eases meeting your repayment liability every month. Instead of paying the EMIs for each loan amount separately, you can now make EMI payment for one personal loan only.
b. Convenient loan management
After consolidation, you need to service a single loan only, which eases the overall management of the advance. This makes keeping your finances sorted easy, allowing you to plan your expenses better with higher usefulness.
c. No hassle of tracking multiple due dates
Along with these, you also do not need to track due dates for multiple EMI payments. This allow for convenient repayment every month as you go with minimum hassle.
d. Interest levy at a single rate
When servicing multiple loans, the interest rate for each advance is levied differently. And, it is quite possible that you would be servicing them at higher rates. Consolidation of debts thus allows you to repay the advance at a single rate only.
Reasons to Avail a Personal Loan for Debt Consolidation
Below are given five useful reasons why a personal loan suits best when consolidating your debts.
1. A high financing value
As debt consolidation requires the new loan to be of high quantum, a personal loan serves just right. With reputed lenders, financing of up to Rs.25 Lakh is available with ease, allowing for easy accommodation of multiple small debts.
2. Attractive rates of interest
With the increasing lender competition in the market, it is quite convenient to find one of these loan offers with a low rate of interest. Repayment of the loan thus becomes affordable too, with overall interest liability accumulated kept in check.
3. Repayment in affordable EMIs
Along with these, some best lenders also allow repayment of the advances in easy EMIs, which makes them affordable to pay as per your current income. To find the lowest EMI you can pay as per your loan amount requirements, use an EMI calculator available online.
4. An extended tenure
Personal loans usually come with a long and extended tenure for repayment. With top lending institutions in the market, you can easily secure a tenure of up to 5 years for loan repayment. This allows for division of your total loan liability, including the principal and interest component, into up to 60 months, thus making small chunks of repayment liability payable as EMIs.
5. Easy to avail
These advances should be your go-to funding for debt consolidation also because they are one of the most easily accessible funding options today. You only need to meet a few personal loan eligibility requirements to be able to avail the required financing value. An absence of collateral has also drawn many aspiring borrowers towards these loans.
Apart from these good reasons, personal loans can be the ideal option for financing any other expense as well. It is primarily because these advances come with zero restrictions to end-use, allowing the borrower to utilise the finances for any funding need that has risen, either personal or professional.