Are Personal Loans a Good Choice for Debt Consolidation?


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If you are managing multiple payments and small loans, you might be feeling overwhelmed. In such a scenario, searching for a good financial solution to help you meet your financial goal can be a daunting task. You may be missing dates on your payments, your expenditure may be high, or your interest rates on various loans and cards maybe exponential and this might be making you worry constantly.

To ease the burden of debt and organise your finances better, taking a Personal Loan to consolidate your debt might be a good idea. Facing a financial crisis can be a scary situation, but with the right financial tool, you can overcome it. A Personal Loan will help you either clear some of your debt or consolidate them all into one, thereby giving you financial freedom. There are many different types of Personal Loan offered by banks depending on individual requirement.

In order to avoid being constantly worried due to a tough financial spot, it may be a good idea to go on a hunt for a Personal Loan. A Personal Loan will entail several things to consider such as loan tenure, loan amount to interest rates, different banks offer different schemes. SBI Bank Personal Loan, ICICI Bank Personal Loan, Total Capital Personal Loan are some of the few good Personal Loan options in the market.

Before you pick a Personal Loan though, let us try and understand the different types of Personal Loanavailable in the market. Accordingly, you can pick on that suit you.

What are the types of Personal Loans which I can apply for?

Depending on the requirement there are predominantly two types of Personal Loans. One is a secured Personal Loan, and another is an unsecured Personal Loan. Both of these loans are offered by many banks and have different criteria for application.

A secured loan takes into account collateral which is necessary to be shown. While applying for this type of loan, the individual has to set aside either property, gold or any other asset against the loan. This means that if there is a default on payment or non-repayment of the loan, the bank can seize the asset.An unsecured loan is one in which the banks ask for no collateral against the loan. A lot of Personal Loan offers are unsecured loans, so there are many to choose from.

If you are facing an emergency or a mounting debt, instead of borrowing money from someone or an unofficial lender, look at a Personal Loan. A Personal Loan takes the worry away by providing a structured, systematic way of repayment also ensuring that you get the money at the time of need. The interest rates are generally good, and the loan repayment term is long, thereby providing you with the space to pay off your debts. A large debt cannot also be paid off by a credit card as the amount given on cards is lower than that of a Personal Loan.

There are many benefits to consolidating your debt including better organisation of your finances. If you avail a Personal Loan, you can bring all under debt under one umbrella pay it off and move to a more systematic payment model. It will also encourage you to keep things simple and manage your finances better in the future.

Similarly, if you are looking at multiple payments on different cards and debts, you can end up missing a deadline. When you consolidate your debt using a Personal Loan you don’t have to worry about meeting different deadlines and numbers. Your only priority will be to pay the equated monthly instalments on your loan.

Once you have consolidated your debt using a Personal Loan you can also start planning your finances better. You can look towards savings and investments in the future and also maintain a good healthy credit score with regular payments. This is because all the money you would be paying towards various interest rates on your debt can move towards savings as there will be one singular interest rate with a Personal Loan.

One of the best possible Personal Loans to avail in the market is an SBI Bank Personal Loan. This Personal Loan is offered to both salaried and self-employed individuals for a loan period of 60 months. Interest rates are affordable on an SBI Bank Personal Loan starting at 11.05{60b769f4cd8a2cb35acf037e78519c7bb5b960cc7ed2c5f3508c9cd8fb241e8f}. The process of applying for this loan is completely online and hassle-free with minimum documentation. The loan amount offered by SBI Bank goes up to a maximum of 15 lakhs.

One of the biggest criteria for a Personal Loan to be cleared seamlessly is having a good credit score. What is a credit score? A CIBIL or a credit score is your capacity to pay back a loan on time. This is calculated on the basis of your financial records, your past loans, any defaults and your earning capacity. Checking out your credit score ahead of applying for a Personal Loan is important as most banks reject loan applications if the borrower has a low credit score. A healthy credit score option for a Personal Loan is anywhere between 700-900.

Having a better understanding of Types of Personal Loans gives you the knowledge to make the right decision when required. It helps to weigh your options carefully can take into the account loan amount, tenure, interest rates any other terms and conditions required before signing on the dotted now. It relieves you of a financial crisis by providing money at the time of need.  We hope this article helps you on your journey to make the right choice when it comes to achieving your financial goals.