Sure, a loan is a debt that helps you manage your financial situation and fulfil your desired goals without dipping into your life savings. But can debt save you from falling into a debt trap? The answer is yes! For instance, taking a personal loan can help you repay your existing loans and save you from drowning in a pool of debt. This process is called debt consolidation. Read the article to learn more.
How Personal Loan Can Save You From Falling into Debt?
What is Debt Consolidation?
Debt consolidation refers to the act of taking out a new loan to pay off your existing liabilities and debts. Simply put, multiple loans are combined into a single and larger debt that is paid off with a new loan at more favourable terms. These debts can include credit card debt, student loans, auto loans and other personal loans.
However, the new loan must have a lower personal loan interest rate and monthly payments. It is a smart financial strategy that can help you deal with the struggle of keeping up with multiple loans. Also, it makes a ton of sense to opt for debt consolidation if your credit score has improved since you took the original loans, and you can qualify for better repayment terms.
How to Consolidate Debt Using a Personal Loan
Apply for a New Personal Loan
The first step is to apply for a personal loan with a credible lender. Make sure to compare several lenders and their loan rates before zeroing in on one, as the interest rates for the new loan must be lower than the original loans. Hence, swap the high-cost debt for a low-cost debt. Also, calculate how much amount will be needed to cover the cost of the loans before applying. Opt for a higher principal amount to repay the outstanding debts in a single go.
IndusInd Bank’s Easy Credit personal loans offer attractive interest rates and best-in-class features that make the borrowing process seamless.
Choose a Flexible Repayment Tenure
Many lending institutions provide you with the benefit of a flexible loan tenure that you can choose as per your repayment capability. Along with a flexible tenure, ask whether there is a prepayment facility to help you pay off the loan before time.
Calculate Your Monthly EMIs
Lastly, it is crucial to get a clear picture of your monthly outflow. Use an EMI calculator to get an estimate of your monthly EMIs. IndusInd Bank allows you to calculate your monthly instalments using a personal loan EMI calculator for free. You just have to enter your loan amount, repayment tenure, and the personal loan interest rate to get the results.
To Sum Up
Whether you are dealing with a pile of credit card debt or have other pending dues, personal finance can be your way out. It can save you from servicing multiple loans simultaneously and help you pay off several debts in one go. So, what are you waiting for? Apply for a personal loan online and manage your finances smoothly.