There are few things worse than the stress of mounting debt, especially when your finances are running low. After all, you don’t want a few missed EMI repayments to put you in a financial fix, or worse, damage your credit score. Thankfully, there are ways to still manage your debt and salvage your finances. And the easiest one among them is to consolidate your debts through a small personal loan online.
So let’s understand what small personal loans to consolidate debt are.
What does ‘loans to consolidate debt’ mean?
As the name implies, a small personal loan for debt consolidation enables you to pay off your debt by combining all of your EMIs into a single EMI. As a result, using a loan to consolidate debt can reduce the total interest you owe on the debt and help you pay it off faster. It can also make debt repayment easier because you only have one monthly payment to account for in your budget.
An important thing to note here is that your credit score significantly impacts the availability and interest rates of debt consolidation loans: The higher your score, the more options you have and the less interest you’ll pay.
Here are some reasons to get a debt consolidation loan.
#1 Simplifies debt repayment
When you get a debt consolidation loan with a lender, you essentially merge all your debts into a single loan at a fixed interest rate. So, you only pay one monthly EMI, reducing the stress of keeping track of multiple EMI due dates from different loans. Also, if you intend to live a debt-free lifestyle, you will know when your debt will be paid off.
Today, many lenders offer flexible EMI repayment options on debt consolidation loans making repayments even more convenient. All you need to do is choose a loan repayment plan that matches your budget. Need help? Use an online personal loan EMI calculator to decide on a suitable EMI plan.
Additional read: Simple and Smart Ways of Debt Consolidation
#2 Low-interest loan
Did you know when you pay EMIs from different loans, you may be spending a higher amount on interest? Yes, since various loans usually have different interest rates, there’s a good chance you may have one or more high-interest loans that drain your finances. By consolidating your loans, you only pay EMIs at a set interest rate. So, you lower the total interest amount spent in the long term.
The best part? You could get a debt consolidation loan with a lender offering affordable personal loan interest rates and save even more.
#3 Consolidation for credit card debt
Credit cards are unquestionably convenient because you do not have to pay cash up upfront. You must, however, pay off your credit card balance on or before the due date on your statement. You will face penalties if you do not pay your credit card bills on time. Also, credit cards often have a higher interest rate than a small personal loans.
Instead of using revolving credit on your cards, you can take credit card consolidation debt and pay a lesser interest rate on your debt. You can also pay it off in manageable EMIs over time.
#4 Helps credit score
Now, you may be worried about an additional hard enquiry impacting your credit score, especially when you have a lot of mounting debts. But a debt consolidation loan does more to increase your credit score than you think.
It not only reduces the instances of missed repayments but also increases your total credit mix. While timely repayments point to efficient debt management, having a good mix of credit often implies sound financial management. Both of these ultimately increase your credit score.
#5 Simplified finances
When you combine all your debt, you no longer have to worry about various due dates each month because you simply have one payment. Furthermore, the payment is the same each month, so you know exactly how much money to set aside. Therefore, there is less financial stress when there are fewer repayments.
#6 Easy loan application
The last thing you want while managing your debt is application stress. Thankfully, you never have to worry about complicated application procedures or hard to meet loan eligibility criteria while getting a small loan. Most lenders only require you to fulfil simple eligibility criteria, including age, employment status, minimum salary, etc. and ask for documentation to prove the same.
That’s it! In most cases, approvals are quick, and the funds are disbursed swiftly to your bank account.
Additional read: What is Debt Consolidation? How Can a Personal Loan Help?
Manage your debts easily with a debt consolidation loan from Tata Capital!
No doubt, a debt consolidation loan can help you bring your debts under control. But we at Tata Capital can help you reduce the anxiety around applying for a new loan even further.
Thanks to our online application process, you can apply for a small personal loan online in just a few clicks. What’s more, you can decide your repayment plan and enjoy competitive personal loan interest rates too! Connect today!
21 June 2023
5 mins read
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