Debt means some of the money owned or dues and consolidation means merging. Instead of having multiple loans, take one loan and pay all the others is known as debt consolidation. In simple terms consolidation of multiple loans into one is known as debt consolidation.
Imagine Mr Atul has a credit card outstanding balance of 50,000/- and two loans taken from a loan shark of 200,000 each @ 20% interest. Now he is planning to apply for a personal loan of 450,000/- @ 12% interest so that he can pay all the outstanding of credit card and loans. This is an intelligent and financially profitable decision to make as Atul will be saving thousands of rupees.
Debt consolidation is a very good idea if you are paying a high-interest rate on your loans. Debt consolidation may help you to save a couple of thousands and reduce your monthly payments. There are many benefits of debt consolidation. Below are a few: –
- Big Savings – By opting for loan consolidation you can save a lot of money at least some thousands of rupees if you can get a loan on the low-interest rate.
- Hassle-Free – Now you don’t have to remember the due date of multiple loans as you have to pay only one instalment instead of many. A single loan is easier to manage as compared to multiple debts.
- Low-Interest Rate – Personal loan interest rate is lower as compared to the interest rate charged by a loan shark or the interest you pay on your credit card outstanding.
- Debt-Free Sooner – As you save a lot of money by paying low-interest rate and reduced instalments, you can save these and try to close the loan sooner and become debt-free.
Click here to consolidate your debt.
You can combine all your unsecured debt into one monthly payment obligation instead of many. Anyone who is struggling with multiple payments can choose this option.
Through debt consolidation, you can become financially disciplined, save a lot of money by a reduction in interest rate, finance charges and over-limit fees and become debt-free quickly.
Here is step by step guide for debt consolidation: –
- Identify all the debt you want to consolidate, list the outstanding amount of every debt and interest rate against each debt.
- Calculate the total outstanding amount by adding the outstanding amount of every debt.
- Calculate the total monthly payment by adding the monthly payments you currently make for each debt.
- Now you can apply for a personal loan equal to the total outstanding amount of all the debt, you can do this by approaching a bank directly or you can seek our help. We can find the best debt consolidation loan for you. Apply Now.
- Next step is to check your loan eligibility, monthly payment and Interest rate.
- The last step is to compare the existing monthly payment you make against your debt with the future monthly payment you will make with a debt consolidation loan.
Debt consolidation plan helps in reducing the monthly payment and interest date, now your new monthly payment and interest rate with the debt consolidation plan should be lower than the total you were paying.
You can use the below table to capture the required information for debt consolidation.