Tips to Choose the Right Debt Consolidation Loan in India

 Summary: If you want to consolidate your debt, you should choose a loan that can help save interest and reduce the repayment time.

 

If you are under credit card debt, you are paying a huge interest to your credit card companies. A large part of your monthly repayments consists of the interest. If you can reduce the interest, you can come out of the debt. If you ask an expert, they will advise a debt consolidation loan in India.

However, you should learn about the factors that can help you choose the best loan to consolidate your credit card debt.

 

1. Assess Your Financial Situation

 

Calculate your total outstanding debt and the monthly repayments. Deduct the repayments from your monthly income to find how much you lose every month from your income. It will help you choose a loan that can help repay all your debts, especially high-interest credit card debts.

 

2. Choose the Right Loan Type

 

Your debt consolidation loan in India can be a personal loan, a balance transfer, or a secured loan against a property. Which loan you should choose depends on your financial needs. For example, if you have a small credit card debt, you can repay it with a personal loan. However, a secured loan at a low interest rate will be better to repay a large debt.

 

3. Check Your Eligibility

 

When you have a loan to consolidate your debt, you should check whether you qualify for that loan. Or it will be better to keep your options limited to the loans you qualify for. If needed, you should improve your credit score to enhance your eligibility for low interest loans.

 

4. Compare Interest Rates and Loan Terms

 

Interest rate plays a crucial role in a loan. If your debt consolidation loan in India carries a high interest rate, it will be good for nothing. If you want the new loan to help repay your debt, you should compare interest rates and terms of all loans you qualify for and choose one with the lowest interest rate.

 

5. Select a Suitable Repayment Tenure

 

The objective behind debt consolidation is to come out of debt as soon as possible. If you choose a long tenure, you will end up paying more interest. On the contrary, a shorter tenure will not only reduce interest but also speed up repayment.

 

Choosing a debt consolidation loan in India is the right way to repay your outstanding debt. However, you need to make the right decision about a new loan. It shouldn’t be another liability.

Common Mistakes to Avoid While Applying for Instant Personal Loans Online

 A personal loan is a real help. It is quick, flexible, and affordable. If you know how to apply, you can have all the benefits.  

All fintech platforms, banking apps, NBFCs, and even private moneylenders urge people to apply for personal loans, assuring them of quick approval and releasing the assured sum. They hurry loan applications instead of educating people on common mistakes that could cost them dearly. Here're mistakes to avoid when you apply for an online instant personal loan.

1. Never ignore your credit score

A personal loan at a reduced interest rate can help meet your financial needs without plunging you into a debt trap. However, you need a high credit score of over 700 to get a discount on interest rates. Check your credit score before applying for a loan and apply only when the score is high.

2. Avoid applying with Multiple Lenders Simultaneously

Never approach multiple lenders simultaneously, even if you are in dire need of funds. It will result in multiple hard inquiries on your credit score, leading to a low score on credit checks. This approach will end in disappointment.

3. Always compare loan offers

No matter how many lucrative loan offers you get, you should avoid making impulsive decisions. Comparing interest rates, processing fees, and repayment terms can help find the best option. Perform all these checks when you apply for an online instant personal loan.

4. Read terms and conditions carefully

Terms and conditions contain vital information on late payment penalties, prepayment charges, and interest rate changes due to market fluctuations. If you don’t read between the lines, you could miss the information and regret it when the lender surprises you with hidden charges.

5. Avoid borrowing more than needed

Pre-approved loans, bundled with low interest rate, lower EMI, and longer payment tenure look tempting, but borrowing more than needed could be a debt trap. You will enter into a cycle of repaying the loan for a long time. NBFCs keep making such offers to their existing customers.  

6. Provide correct details

Read the application carefully and fill all details asked by the lender. Ensure clarity in writing and authenticity in information. Incorrect information and incomplete application is trashed by lenders. It also casts doubt over the borrower’s intent of taking loans.

Conclusion

Apply for an online instant personal loan only when you need quick funds. Borrow the amount you can repay and opt for a shorter tenure to repay the loan without prepayment charges. Keep an eye on your credit score. It shows your financial health and you should keep it right.   

5 Important Things To Do With An Online Instant Personal Loan

 An online instant personal loan can work like a financial tool to manage your funds. Whether it is a medical emergency or debt consolidation, you can make the best use of a personal loan.

1. Handle Medical Emergencies

 A medical emergency can emerge anytime and without warning. It could be a sudden surgery, post-treatment expenses, or hospital admission. A personal loan can help pay all your medical bills and come out of the difficult situation without losing your savings or mortgaging your assets.

 2. Consolidate Debt

An Lowest instant personal loan can help repay your debt on which you are paying a high interest. For example, take credit card payments. Credit card companies charge a high interest. On the contrary, a personal loan carries a low interest. You can convert your credit card debt into a personal loan and save money.

 3. Fund Home Renovation

Does your home need repair or renovation? If yes, then you should apply for a personal loan. A quick loan at a low interest rate can help save your savings. You can renovate your home with much ease and comfort by taking a personal loan. The loan can be repaid in easy installments.

 4. Pay for Education or Courses

Paying your education fee with a personal loan is a great idea. In this way, you can easily fund your education and still have some money in your hands to buy books and notebooks. The advantage of a personal loan is it can be used as you please.

 5. Take a Vacation

Your dream vacation is only a click away. An online instant personal loan can help transform your dream into reality. You can plan a vacation to any destination without any worries. A personal loan can accommodate all your vacation expenses from accommodation to air travel.

How Personal Loan Interest Rates Are Calculated: What You Need to Know?

 

A personal loan interest rate can either be fixed or floating. While fixed interest is predictable, floating interest fluctuates according to market conditions. It could be beneficial if the interest rates drop. However, these aren’t the only factors to consider when applying for a personal loan.

Important factors to consider before you apply for a personal loan

 

1. Credit Score

 Everyone is allocated a credit score according to their financial health. It is a three-digit number typically between 300 and 850. A credit score of 750 and above is considered high and eligible for personal loans. However, the interest rate varies according to the credit score.

 

2. Loan Amount & Tenure

The amount borrowed and repayment time also impact the interest rate. For example, a low amount paid over a short time has the lowest interest rate. Conversely, a high amount and long repayment time increase the interest rate in the long run.

 

3. Lender Policies and Offers

Banks and private lenders have different credit policies and offers that affect their interest rates. For example, loyal customers with excellent credit history are offered a low personal loan. You should check lender policies and offers while looking for a loan.

5 Alternatives To A Personal Loan With Less Interest

 

A personal loan with less interest is a reliable way to fund your financial needs. However, you can explore other ways to get quick funding at the lowest interest rate. Here are some popular alternatives to a personal loan.

 

1. Gold Loans

 Gold loans carry the lowest interest rate, from 7% to 12% per annum. Gold is a valuable asset for lenders, who give secure loans on pledging gold. Additionally, gold loans require minimum documentation and take less time to process.

2. Loan against Fixed Deposit (FD)

 Loan against FD costs 1% to 2% above the FD rate. If you have an FD, you can easily get a personal loan with less interest on your fixed deposit. You won’t have to break your deposit or lose interest on FD.

 

3. Loan against Property (LAP)

 Borrowing a loan against property can save you money on interest. If you have an investment property, you can convert it into a quick loan at an interest rate of 8% to 12%. The good thing is that you can extend the loan tenure up to 15 years.

 

4. Credit Card Balance Transfer Loans

Converting a high-interest credit card debt to a lower-interest loan is a great way to fund short-term financial needs. It is called balance transfer and it often comes with a promotional interest of 0% for a few months.

 

5. Peer-to-Peer (P2P) Lending

 P2P lending often has interest rate lower than banks. For this reason, it is considered an alternative to personal loan with less interest.  

Could I Rely On An Instant Personal Loan For Emergency Funding?

 

If you are in need of quick funding for any reason, including medical or travel, you should look no further than an online instant personal loan. It is the best way to get quick funds. It is how most people fund their needs.

 

Here’re the advantages of a personal loan

 

1. Quick and Hassle-Free Approval

Online loans are always quick. It is speed money that you can borrow for any need, especially emergency funding. For example, you have some unseen expenses like a medical emergency. You can borrow a quick loan to pay your medical bills and repay the loan according to your convenience.

 

2. Minimal Documentation

Unlike a traditional bank loan, an online instant personal loan requires minimal documentation. For example, basic details, such as identity proof, income proof, and bank statements from the previous six months are sufficient to process a loan application. The lenders don’t ask for any collateral or guarantee to approve a personal loan.

 

3. Convenience and Accessibility

 It isn’t necessary to go to a lender for a personal loan. You can apply for a loan from a mobile app. Download the mobile app of a leading lender and check your eligibility for a quick loan. You will get approval within a short time.

 

4. 24/7 Availability

 An online instant personal loan is the best option for emergency funding because it is available around the clock. It is instant money that you can use to fulfill your financial needs. Flexible repayment options further make it a practical choice.