Debt Consolidation Personal Loan
Let’s consider an interesting scenario. Suppose you borrowed a loan from a bank. And now you realise that you’re facing difficulties repaying it. These difficulties get coupled with your other existing debts which you earlier thought could be managed. But all of it has now piled up and you find yourself unable to manage them altogether. This is where a debt consolidation loan steps in.
Debt consolidation means compiling all your debts in one place and paying them off in one go, instead of settling each debt separately. Simply put, a personal loan aimed at consolidating debt is called a debt consolidation loan. With these loans, you do not need to pay off your mounting EMIs and interest out of your hard-earned savings. You can simply use the loan amount to settle your dues in one go.
In this piece, we discuss the benefits, application process and everything else related to loans for debt consolidation in an easy and simple way.
Features and Benefits of a Debt Consolidation Loan
A debt consolidation loan works like a regular personal loan. The only difference is that it has a specific purpose, i.e. to repay existing debts. Take a look at some of its highlighting features.
Lower Interest Rate
These loans charge nominal rates of interest on the loan amounts. Lower interest rates, thus, ensure affordable EMIs and higher savings for the borrower.
Better Debt Management
Loans for debt consolidation allow borrowers to pay off their outstanding amounts in one go. This is especially helpful for borrowers who find themselves stuck in multiple loans at the same time.
Amounts as high as ₹40-50 lakhs can be raised using these loans. The loan amounts are quickly approved and instantly disbursed to provide ready financial assistance to borrowers.
Debt consolidation loan in India are offered for as many as 8 years. The loan tenures, varying from lender to lender, aim at offering short to medium-term financial support to borrowers in managing their liabilities.
These loans can be comfortably repaid through equated monthly instalments (EMIs) and prepayment facilities. The loan replaces multiple EMI schedules of various debts with a single EMI schedule, payable towards a single loan.
No Collateral Requirements
A debt consolidation personal loan does not demand any collateral from the borrower. This helps ensure that the loan itself doesn't become an additional burden on the borrower.
Restrictions on Further Borrowing
Once borrowed, these loans restrict the borrower from taking any more credit until the loan is repaid. This is done to prevent the borrower from falling into further debt traps.
Almost all the major banks and Non-Banking Financial Companies (NBFCs) offer such loans. Moreover, debt consolidation loan eligibility extends to salaried as well as self-employed individuals.
How to Apply for a Personal Loan for Debt Consolidation?
Once the loan amount is sanctioned, the borrower can use it to settle their outstanding debts. Once these are paid off, the repayment of the debt consolidation loan starts with monthly instalments.
Interested borrowers can apply for the loan in the following manner.
Urban Money provides personal loans from the country’s top banks and NBFCs. These loans can be used to consolidate debts. Follow these simple steps to submit a debt consolidation online application.
- Visit www.urbanmoney.com
- Hover over to the ‘Loans’ category and select ‘Personal Loan’.
- Choose the most suitable option from the available list of banks and NBFCs.
- Click on ‘Enquire Now’.
- Enter the details and click on ‘Submit’.
Our trained representatives will reach out to you and take your loan application further. A digital application usually offers fast approvals to provide instant debt consolidation loans.
Urban Money offers best-in-class in-person consultancy services. Our financial experts assist borrowers in choosing the best option from a variety of debt consolidation loan providers. Customers can contact us for a one-on-one interaction at:
1800 208 3344
Good Earth Business Bay, 9th Floor, Sector 58, Gurgaon -122011, Haryana
Debt consolidation loan providers require the following documents from borrowers while accepting their loan applications.
- Duly filled loan application form
- PAN Card
- Identity Proof: Aadhar card/ Voter’s ID/ Other accepted proofs
- Address Proof: Driver’s licence/ Aadhar card/ Utility bills/ other proof
- Income Proof: Form 60/ Financial statements of the business/ Bank statements/ other proof
- Employment Proof: Employee ID/ Business registration/ other proof
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- Employee Provident Fund
- Systematic Investment Plan
- Fixed Deposit
- Mutual Funds
- Recurring Deposit
- Systematic Investment Plan (SIP)
- Employees Provident Fund (EPF)
- Public Provident Fund (PPF)
- Voluntary Provident Fund (VPF)
- National Pension Scheme (NPS)
- National Savings Certificate (NSC)
- Senior Citizen Saving Scheme
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Frequently Asked Questions (FAQs)
Can I get a loan to consolidate my debts?
Yes, banks and NBFCs offer debt consolidation loans in India which can be used to merge existing loans.
What is a debt consolidation loan?
It is a loan used to settle multiple debts at once. These loans merge a borrower’s existing outstanding credits and offer better debt management.
Can debt consolidation only be done using a personal loan?
No, other loans like a loan against property can also be used to consolidate debts. Personal loans, however, remain a much more popular choice to settle multiple debts in one go.
Are debt consolidation loans bad for your credit score?
It might lower the ratings initially. But in the long run, it helps maintain stable credit rates, especially if repayments are made on time. In any case, consolidation of debt is always better for your credit score than being labelled as a defaulter.
What is the difference between debt consolidation and a loan?
Debt consolidation is not a different category, but one of the many functions of loans. Personal loans and business loans can both be used for debt consolidation. Therefore, there isn’t much difference except that debt consolidation cannot serve any other purpose other than settling outstanding debts.
What is the risk of a debt consolidation loan?
Higher interest rates, upfront costs and restrictions on further borrowings are some of the cons of this type of loan.