Consolidation simply means merger or unification. Debt consolidation in terms of loan means bringing or merging all your debts under one single debt or loan.
For example, assume you have 3 various debts going on at the same time with a bank or NBFC. You pay 3 EMIs every month with their different interest rates. It’s kind of over bearing for you to pay so many debts with their individual interest rates. But by taking a debt consolidation loan, you can merge these three debts under one. That means you take one big loan equivalent to the 3 debts in total. You pay off these three debts with this one loan. And then pay off this one loan with one interest rate.
Benefits of Debt Consolidation:
- Lower Burden On EMI:
Debt consolidation helps you to reduce your the overall monthly EMI costs. Instead of paying multiple EMIs, you can pay only one which can range lower than all multiple EMIs combined. This way you spend less money on your monthly budget of EMI.
- Reduced Interest Rate:
If you are paying multiple debts, you pay multiple interest rates on each debt. These multiple interest rates are huge if you are paying them separately. But if you choose debt consolidation, your multiple interest rates also merge into one interest rate which is more affordable. You get financial benefits on this singular interest rate.
- Easy To Manage Finances:
If you are paying multiple EMIs every month, it becomes a difficult task to manage the funds. You have to keep a very close track of your due EMI payments dates and your monthly financial expenses. You have to have the huge EMI amounts in your banks before repayment date or else you get charges with late fees. Also multiple debts can leave in a financial crunch every month. So taking a debt consolidation loan, you can pay only one EMI each month, which can be less than your multiple EMIs. This will help you to manage your every month finances in a better way without facing a financial crunch.
- Multiple Ways To Opt Debt Consolidation:
You can avail a debt consolidation by choosing various types of loans. You can choose a secured loan or an unsecured loan for debt consolidation. Personal loan, car refinancing and loan against property are considered as the best types of loans for debt consolidation.
So if you are having trouble paying multiple debts, choose debt consolidation today! Click here to know more.