Learn How A Debt Consolidation Loan Can Reduce Your Payments
Explore the nature of debt consolidation and, more importantly, all the ways it could potentially help you save significantly on your monthly loan repayments.
It goes without saying that having a large amount of existing debt is a financial burden in every sense. You may be shouldering this burden due to your circumstances and unforeseen needs; however, there are options available to you to help manage this debt and ease the burden. One such option is that of taking a debt consolidation loan, which on face value may just sound like taking a new loan to pay off existing ones, but does come with a range of particularly helpful benefits to help you with your excessive borrowings. You will find unclear and mixed information when it comes to debt consolidation during your research, so we have put together a handy guide on a debt consolidation loan to help you see how it can come to your aid.
What is Debt Consolidation?
As the title suggests, a debt consolidation loan allows you to group all your existing loans together into one single consolidated loan. This would be a new loan entirely with a whole new set of terms and conditions to your previous set of borrowings and may even be from a new lender altogether.
The clear advantages here are that of simplicity and a lack of hassle on payment and administrative aspects. Buy clubbing your loans together, you only have to pay a single EMI instead of multiple repayments. What’s more, with a debt consolidation loan you just have to deal with one single lender, which can be a real bonus to those bogged down by constantly managing multiple loans with different lenders in terms of communication and paperwork.
More than the benefit of having efficiently organised finances, opting for a new loan could well reduce your monthly payments overall through a lower interest rate—and this is the biggest advantage of a debt consolidation loan. For example, if you had three credit cards with outstanding balances to be paid, each with interest rates of 12%, 18% and 32%, you could well consolidate these into a single loan with an interest rate of 10%-15%, which would save you money.
Having said that, consumers should note that this is not a one size fits all solution and may not be applicable for all depending on your circumstances.
When is Debt Consolidation Advisable?
Consolidation would make sense for those in these situations above all else:
- For those who are constantly paying late fees on multiple loans. They will most likely benefit greatly from the opportunity to be more organised with their payments by dealing with just one lender.
- Those with multiple loans of high interest rates could benefit greatly from consolidation to a lower rate.
- Those who just can’t afford all their monthly payments on the existing loans. It would certainly be in their interest to find out if they are eligible for a consolidation loans and more importantly how much money they could save using this route.
Debt consolidation loans could be a saving grace for you. It could be a sizeable help for those struggling to keep up with multiple loan payments, looking for an easier and more convenient solution and lowering your interest. It is thus in your own benefit to find out exactly how a debt consolidation loan could help you with your repayments. As you do your research, look into convenient Personal Loans offered at low interest rates from Bajaj Finserv. With loans up to Rs.25 lakh, instant approval and funds in your account in 72 hours.