There are many uses of a personal loan, but consolidating debt is one of the most important ones. In the unfortunate event that you have accumulated a large amount of debt, it makes sense to consolidate all of it together via a debt consolidation loan. This will help you channelise all your finances and energy towards clearing one single loan. So, in answer to the question, ‘Are personal loans good for debt consolidation?’, you should know that when used well, a personal loan for debt consolidation can prevent your debt from snowballing uncontrollably and can save you a good deal of stress too. Here are 5 advantages of using a personal loan for debt consolidation.
Get Access to Loan Amount Easily
To start off with, personal loan eligibility criteria are quite simple. You have no asset-related papers to produce and all you need to do is meet your lender’s minimum income, employment, and age requirements. For instance, financing solutions like Bajaj Finserv Personal Loan offer you up to Rs.25 lakh on affordable terms, without any collateral. To top it all off, getting a personal loan is quick, as all you need to do is fill up the personal loan online application form on the lender’s website.
Pay a Single EMI Each Month
A key benefit of consolidating your debt is that you don’t have to juggle paying different EMIs on different dates. In turn, you can be sure of not missing deadlines and also organise your finances much more easily. With less stress on your mind and fewer deadlines to keep track of, you can also focus on rebuilding your finances steadily.
Pay Debt at a Fixed and Affordable Interest Rate
One main advantage you have when you consolidate your debt is that you can capitalise on the relatively low interest rates on personal loans. In turn, you can clear debt with high interest rates, such as credit card debt more affordably. This will stop the interest from compounding and your total debt from increasing. Therefore, in such cases, consolidating your debt with a personal loan can save you a lot of money. Additionally, when you opt for financing methods, where the interest rate on personal loans is fixed, you know exactly how much debt consolidation will cost you.
One way to make repayment even more affordable is to use Bajaj Finserv Flexi Loan facility. This helps you in two ways. Firstly, you pay interest only on the amount you borrow from your total sanction and not the entire amount. Secondly, by paying interest-only EMIs through the tenor and clearing the principal at the end of the tenor, you can lower your EMIs by up to 45%.
Build Your Credit Score by Making Timely Repayments
Among the best reasons for consolidating your debt with a personal loan is the fact that you can boost your credit score. So, if you are wondering, ‘Will a debt consolidation ruin my credit?’, the answer is no. Similarly, if you’re questioning your decision and thinking, ‘Does it make sense to get a personal loan to pay off credit cards?’, the answer is yes! Since your EMIs are now more affordable, fewer in number, and easier to tackle, you are more likely to be able to pay them in a timely manner. Every time you do this, you augment your credit score. Additionally, since a debt consolidation loan helps you to pay off all outstanding debts at once, your credit score will certainly benefit.
Make Prepayments at Nominal or Nil Extra Charge
Once you’re financially stable, you can dedicate surplus money towards making prepayments and eventually foreclosing your loan. Some lenders make this easy for you by keeping prepayment and foreclosure charges to a minimum. In fact, if you use Bajaj Finserv Flexi Loan facility and wish to make prepayments, you can do so at no extra charge.
Finally, if you are in urgent need of funding, the best way to expedite the process is to check your pre-approved personal loan offer from Bajaj Finserv. It allows you to apply and get the funds you need in no time at all!