Why Debt Consolidation Loan?
When it comes to debt consolidation, there are many misconceptions. It is important to understand the different aspects of debt consolidation so that you can plan your finances accordingly and make smarter financial decisions. Making poor financial decisions can lead to bad debt and increased credit repayment amounts that can lead to further debt. It is best to put a halt to this incessant cycle with a single debt consolidation loan. There are many debt consolidation loan benefits. In this article, we will have a look at debt consolidation loans and understand how they can be beneficial when it comes to the repayment of debts.
5 Things You Need to Know About Debt Consolidation Loans
Before deciding on a debt consolidation loan here are 5 key aspects that you should know.
1. It is Affordable
Debt consolidation loans are considered to be affordable as they provide a greater range of flexibility while providing the benefit of nominal interest rates. In addition, it can be less of financial stress to repay a single loan rather than paying several debts that have varying interest rates. With a consolidation loan, you have a range of other benefits such as a unique flexi loan facility with which you can repay interest similar to that of EMIs.
2. Single Debt Agreement
A debt agreement is essentially a contractual agreement between the lender of a financial instrument and the borrower. The main terms of this concern determine your ability to opt for additional borrowings. This way, the amount of the debt consolidation has to be used only to repay the outstanding debts that you have. With this agreement, you are also bound to pay your debts in a particular fixed period without any delays. In case of further delays, the debt can lead to the lender charging you with fines and penalties.
3. Does Not Clear Existing Debts
It is key to understand that a debt consolidation loan does not reduce your debt obligation. The process of availing a debt consolidation loan does not eliminate your debt altogether. Instead, it makes your repayment process easier. Once you repay all of your existing debt with this loan amount, you will still have to repay the consolidation loan. You can make these repayments as EMIs throughout the tenor or can also choose to repay the entire loan as a lump sum amount.
4. Repay Multiple Debts With One Affordable Loan
Usually, the process of repaying multiple debts can be challenging. Some of the main aspects that contribute to this challenge are varying interest rates, managing different streams of repayment, and others. For instance, you could have different credit card bills, home loan repayment, personal loan EMI, and others to repay on a recurring basis. Multiple repayments can also lead to errors leading to you defaulting a repayment. Instead, you can repay all of your debt such as credit card bills and other borrowings using a single debt consolidation loan.
5. Restricts Borrowing More During Consolidation
In response to repaying many different streams of debt, it can be common to opt for more credit. Borrowing more debt can only result in a further complicated process of repaying debt. Instead, with a debt consolidation loan, you can opt for one stream of credit and repay several streams of debt.
In Conclusion
Debt consolidation loans have numerous benefits that can simplify the debt repayment process. You can apply for a debt consolidation loan online with minimal paperwork and less hassle. If you are looking to avail of a loan, Piramal Capital Housing and Finance can be beneficial. Along with excellent service, you can experience several other benefits such as quick approval and fast disbursal.