Bangalore is nicknamed the IT capital of India and is also renowned as the silicon valley of India. The cost of living is high in this city, and the people trying to keep up with the standard of living have turned towards borrowing instruments to fund it.
These borrowing instruments have become an integral part of their lives, and their expenditure habits have also become lavish. Hence, loans and credit cards have occupied a prominent aspect of the finances of a Bangalorean.
Debt Consolidation
Debt consolidation refers to an amount borrowed to pay off smaller loans and bring all of an individual’s debt under a single debt. The new debt taken is usually under favourable conditions, such as lower interest rates, lesser equated monthly instalments (EMIs), longer tenure of repayment, etc.
A debt consolidation loan consolidates an individual’s debt into a single loan. Usually, such a loan taken is of the exact amount that requires to be paid off. This releases the individual from the obligation of making multiple payments and now needs to make a single payment periodically towards the consolidation loan repayment.
This also aids in managing one’s finances easily and relieves a lot of stress that multiple debts can lead to. Keeping track of multiple payments is complex and can lead to missing payment dates and being charged extra for them. Debt consolidation provides a way out of this; a borrower only needs to make a single payment.
What debts can be consolidated by debt consolidation loans?
Any unsecured debt or loan not tied to any asset can be consolidated under a debt consolidation loan. Student loans, credit card loans, etc., are examples of loans that can be consolidated.
Why are personal loans suitable to serve as debt consolidation loans?
A borrower avails a personal loan from a financial institution for personal expenses does not need the purpose to be specified to the financial institution. This is an unsecured loan, and hence no asset is kept as collateral by the institution. It is witnessed, more often than not, individuals avail of personal loans for debt consolidation.
Following are the advantages if a personal loan serves a debt consolidation loan:
- Personal loans are quickly approved if the borrower meets the eligibility criteria for the loan to be availed. Mostly, a bank checks for the applicant’s credit ratings and financial history along with their income.
- Personal loans can be applied via online portals and applications. These online portals let individuals calculate the EMIs payable, given the loan’s tenure, interest rates, and principal amount. This allows the individual to check their eligibility for such loans and keep the list of documents necessary to verify the borrower’s credibility when the application for the loan is under process. This also allows the individual to plan finances accordingly.
- Sometimes, online applications of personal loans lead to paperless documentation, wherein the applicant can submit all the documents online for verification.
- Personal loans are readily disbursed once the loan has been approved after necessary verification checks performed by the financial institution.
- Due to the increasing market size, personal loan interest rates are offered at competitive rates. Many institutions are now trying to offer attractive personal loan interest rates to increase their customer base.
- No collateral is necessary to back a personal loan. Hence, it is less risky for borrowers.
- Personal loans provide flexibility in repayment tenure. The tenure can stretch from one year to five years.
- Debt consolidation by personal loan closes up the rest of the borrower’s debts, thereby boosting the borrower’s credit score.
- Personal loans offer prepayment of loans. The financial institution allows closing the loan before the loan tenure is up for a reasonably nominal charge.
- Instant personal loans are available in the market, leading to approval within 30 minutes of application and disbursement as quickly as 72 hours.
This debt consolidation, be it Bangalore or anywhere globally, effectively streamlines an individual’s finances and leads to stress-free debt repayment.
References
https://financebuddha.com/blog/debt-consolidation-loan-in-bangalore/
https://www.bankbazaar.com/personal-loan-for-debt-consolidation.html
https://moneyview.in/loans/debt-consolidation-loan
https://www.stashfin.com/debt-consolidation-loan
https://www.fullertonindia.com/personal-loan-for-debt-consolidation.aspx
https://www.faircent.com/personal-loan/personal-loan-for-debt-consolidation
