New Delhi: Every individual dreams of fulfilling their goals of having a house, a brand-new car, or starting their own business. If you are taking a home loan, personal loan, or business loan to fulfill your dreams, then you know the pain of repayment of those loans. During such time, debt consolidation can be the right option to streamline your financial dues into one loan.
What is debt consolidation?
Debt consolidation is the process of combining all your previous multiple high-interest loans into one single loan. This approach allows people to lower their Equated Monthly Instalments (EMIs) and enhance their financial status.
Eligibility to apply for debt consolidation loan?
Debt consolidation loan eligibility depends on various factors, such as a strong credit score, the nature of existing debts, consistency in income flow, and repayment capability.
Who provides debt consolidation?
Debt consolidation is an option available today with most private and government banks. Various NBFCs and Fintech companies have started offering this option for borrowers at competitive interest rates.
Advantages of debt consolidation
One of the biggest advantages of debt consolidation is potentially a lower interest rate. Furthermore, it helps the borrower organise their debts and, depending on the term, can help them repay debt faster.
Understand risks before opting for debt consolidation
Firstly, suppose borrowers opt for a lower monthly payment by taking a more extended repayment period. In that case, there is probably a high chance that the borrower might end up paying higher costs over the long term. Secondly, applying for debt consolidation entails a high scrutiny of your credit report.
Conclusion
The borrower must remember that debt consolidation comes with interest rates ranging from 14 per cent to as high as 30 per cent per annum. It is always best to research the competitive interest rates, and which works best for you.
Debt consolidation helps one combine several debts, sometimes through lower interest rates, which can save enough money in the long run. This article explores the benefits as well as the risks that come with debt consolidation. Business Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
