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How Consolidating All Existing Debts into a Personal Loan Can Ease Your Pain

Personal Loan

Often in our day to day life, we face situations, we can’t postpone or ignore purchases or expenses. With kids it adds up to the factor. There are numerous formal and informal unavoidable occasions, such as school fee, family functions, healthcare problems, wedding expenses, travel expenses, the list goes on, which can’t be missed because of lack of cash. Willingly or unwillingly, we are forced to spend to keep things up and running.

Priyanka Dubey, a resident of Jaipur, had a terrible experience of getting into debt of paying credit card bills. The expenses covered through credit cards kept on ever increasing due to her frequently purchases. Untimely payment of dues increased to the point where she had to stop using her all credit cards. Priyanka was worried about how to get out of this vicious debt cycle. After long research, she found that a personal loan for debt consolidation could help her get out of this financial crisis. So, she applied for personal loan to clear all her dues. Like Priyanka, how you also can use a personal loan for debt consolidation is described under.


Personal loan for debt consolidation

Like a credit card, personal loan is an unsecured debt i.e. you don’t need to submit any asset as collateral to get a personal loan. However, a personal loan is much cheaper than a credit card. Rate of interest applicable on a personal loan (10% to 18% per annum) is much lower than that on a credit card (2% to 3% per month). If you don’t pay your credit card bill on time, the interest rate will increase dramatically over time. Also, missing a single credit card payment can hurt your credit score badly, which will make it very difficult for you to get credit from banks and other financial institutions.

As personal loans are cheaper, you can use a personal loan to pay off your credit card bills and other expenses on time. By using a personal loan for debt consolidation, not only you pay your credit card bills on time, but also increase or repair your credit score.

Personal loan interest rates from leading banks and NBFCs are as follows:



                                             Personal Loan
        Bank                             Interest Rates* Processing Fee                                                      
SBI
11.00%
In the range of 0.5% to 1%
HDFC Bank
15.50%
Up to 2.50% of loan amount (Min Rs. 1,999; Max Rs. 25, 000)
ICICI Bank
11.25%
Up to 2.25% per annum of loan amount + GST
Bajaj Finserv
12.99%
Up to 3.99% of the loan amount/td>
Citibank
10.99%
Up to 2.0%



The experts believe and propagate to use the plastic to the minimum, as it adds up to the debt. The credit card giver gives the user to spend as much as they want, with just one swipe. Card Companies encourage its users to swipe the cards more often, by offering reward points on every purchase. It lures the user to continue using the card more often, in the greed to accumulate points. It is hyped to be your best friend in times of crisis and often the plastic proves to be one. However one should keep the usage to minimal. On one side it is argued for the discounts and cash backs and interest free period of 45-55 days, if used recklessly, ruins the credit history landing one to debts.

Normally one person possesses, 2-3 credit cards on an average. The outstanding amount keeps on increasing with every expenditure, only to realise when one had already splurged too much. Change in lifestyle, to maintain social status, inadvertently forces one to get trapped in the web of numerous dues whose effect is snowballing.

Reasons to avoid Relying on Credit Cards

Credit Card Purchases urges one to spend more than budget-When one pays in cash, it feels how it goes out of hand. Considering this, one will stop the purchase the moment one feels it is not necessary or the purchase can be delayed. One will physically understand the urgency of buying the product, if one will have to pay cash from pocket. Unless it is of dire need, person either ignores or cancels the plan.
  • The Adding Stress - Peace of mind is of prime importance than buying a product which might not affect if the purchase will not be done. It would be irrational to loose one’s mind over something to increase someone’s business, something which is not really needed.
  • Hampers Credit Score - Unpaid credit cards bills severely damages the credit score of one person. It hampers significantly when one tries to avail the home loan in future. Many a times, a defaulter is denied the disbursal of loans.
It affects the spending pattern and intermingle with the household budget. Try postponing the impulsive buying to make the right decision. Reviewing the spending pattern and the areas where it can be brought down is necessary. It will surely keep the budget in control.

Here’s why one should consider availing Personal Loans to consolidate all the debts.


  • Lower Interest Rates-Personal loan charges are much less compared to the interest rates paid for credit cards combining. It becomes a wise decision to go for personal loans and pay off debts and dues.
  • Easy Tracking Of EMIS - Repayment done through EMIS needs a track. Missing on even one adversely affects the credit score thereby affecting one’s bad reputation. This in turn creates difficulty in availing any kind of loan in future.
  • Fixed Tenure – Usually 1-5 years is the tenure for repaying personal loan. Within this period, the borrower is required to pay the loan amount. When one is aware of EMI deduction every month, the planning to repay the loan gets in process.


Why One should Consider Availing Personal Laon for Debt Consolidation

Below listed are key pointers why one should consider Personal Loans to consolidate debts.

  • Online Application - You can apply for Personal Loan from the comfort of your home. It also gives one the advantage of comparing from various lenders before one decides which one to go for.
  • No Collateral/Security- Unlikely to other loans, no security is needed to submit. This makes availing Personal Loans much easier.
  • Flexibility - From 1-5 yr one can choose the tenure for repayment of the Loan. As per one’s payment ability, it gives the flexibility to the borrower to choose according to the ability for repayment.
  • Quick Disbursal – Once all papers are in place, the amount applied for is approved by the lender. The transfer is made to the borrowers account.
  • Prepayment facility - Making prepayment helps you pay off debts in advance than the fixed tenure. However one has to pay a nominal fee while prepaying the amount.

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