It is highly probable that multiple loans might bring chaos into your financial management. Moreover, managing several loans while going through a bad credit might seem even more an arduous job.
What if you are given a second shot?
Would you not be willing to repair your past mistakes and improve your credit health? A refinancing would be the solution which can alter your financial problem. You can consolidate all your loans into one personal loan and make a consistent repayment.
Several banks, NBFCs and Peer 2 Peer Lending websites provide personal loans for debt consolidation. Read through to know more about how you can get a personal debt consolidation loan.
Debt Consolidation Loan
Debt consolidation loan is a process of taking a new single loan to pay off your several existing loans. This is very helpful especially when you are unable to manage several loans with regard to repayments, interest rate, and delinquency.
Your multiple loans such as student loan, personal loan, credit card bills etc. with different lenders can be consolidated through this loan. Instead of paying 5 or 6 times, you are giving out the same amount in a single payment.
A personal loan for debt consolidation is an unsecured loan which does not require any collateral. Hence the interest rate may be little higher than the secured debt consolidation loan.
How to Apply for Personal Loan for Debt Consolidation
Most of the private financial institutions, NBFCs and some major banks provide personal loans for debt consolidation. you can either apply online or visit your nearby branch. You need to have all the KYC documents for a successful approval. The interest rate depends on your creditworthiness.
Pros of Personal Loan for Debt Consolidation
· Efficient way to manage your loans under a single payment method
· Possibility of reduction in interest rate based on your creditworthiness
· With a long-term EMI, your debt burden is reduced.
· No multiple charges
· Saves your time from paying multiple loans
· Credit score soars with consistent repayment
To know more about the Personal Loan For Debt Consolidation
Short term loans are instant disbursal loans which are usually unsecured and for durations of up to 2 to 5 years.The rate of interest is usually higher than regular personal loans.
What are short-term loans?
Short-term loans are generally extended by financial institutions for 1-2 years. These are mostly unsecured, which means you don’t have to pledge collateral as security to avail them. Though funds can be extended quickly, the reason why they are labelled “short-term” is the associated repayment tenor (to be paid off in full within 6-18 months) rather than the speed of funding. Short-term loans are beneficial for individuals who are unable to get loans for a longer tenure from a bank or a lender due to various reasons.
What are the different types of short-term loans?
Short-term loans are different from the other conventional ones in the market because of the ease of availing them. However, there are many short-term loans in India offering you the funds you need to meet any short-term financial need. Here, we try to cover the ins and outs of the 5 most popular sources of short-term loans, to help you make an informed decision when it comes to availing short-term finance.
Considered to be one of the most affordable sources of obtaining interest-free funds, you can avail of a trade credit where the lender would give you the time to pay for a purchase without incurring any additional cost. Trade credit is usually extended for 30 days. However, you can consider asking for a longer tenor that would easily fit into your plan. A flexible repayment tenor will allow you to leverage the additional time and funds to finance other initiatives.
A bridge loan helps to tide over till the time you get another long-term and larger value loan approved. In India, such a loan assumes importance in the case of transactions relating to the property. For example, if you want to buy a new house but don’t have sufficient funds because the old one hasn’t been sold off yet.
You might want to wait for the funds to come through once you get a potential buyer for the old property, but this will have its downsides, including the price of the new property shooting up. It is during this waiting time that you can avail of a bridge loan that offers two-pronged benefits- it helps you with the funds to buy the property while giving you ample time to wait and get a good deal on the old one.
This loan comes in handy while meeting any urgent financial obligation. You can pledge your insurance policies and other savings instruments such as NSCs in lieu of the loan. A certain percentage of the maturity value on such savings instruments will determine the extent to which you will be eligible to borrow as the loan amount.
Bank overdrafts can be sought on your current account. With an overdraft facility at your disposal, you will be able to withdraw money despite your account not having sufficient cash to cover such withdrawals. Essentially, it helps you to borrow money within a sanctioned overdraft limit. Much like any other loan, an interest rate (often lower than that on credit cards) is levied on the outstanding overdraft balance. Having said that, be wary of certain additional costs that might be attached with such a facility, including fees per withdrawal.
To know more about Interest Rates of Short-Term Loans - 2021
Neha Agarwal wants to take a personal loan to renovate her home. But she is worried that her low credit score will lead to her personal loan application getting rejected. Is Neha right to worry about her credit score? What can she do to overcome this hurdle?
Continue reading to understand the impact of a poor credit score on your personal loan application and smart ways to overcome it.
What is the impact of my CIBIL™ Score on my personal loan application?
A personal loan comes in quite handy when you require funds to meet emergency or other planned expenses. You can use a personal loan to pay for medical emergencies, fund your dream wedding, go on a holiday, purchase a flagship mobile, renovate your home or for any other reason. There are no restrictions on the end usage.
Furthermore, since personal loans are unsecured, you don’t have to provide any collateral to get the loan. All these factors make personal loans the go-to loan product for millions of individuals.
But the catch here is that – to get a personal loan, you need to demonstrate to the lender that you’re financially stable and are likely to repay the loan on time. How do lenders evaluate this factor? They rely on credit scores and the credit history of the applicant.
The first factor that a lender evaluates when you apply for a personal loan is your credit score. The credit score is a numerical parameter that establishes your creditworthiness. It's based on the summary of your credit history, the debts you have taken, your repayment history and other factors.
The credit score ranges from 300 to 900. The closer it is to 900, the better are your chances of personal loan approval.
Credit scores are provided by authorized credit ranking agencies, also known as credit bureaus.
You can quickly check your credit score for free on our website. Enter your mobile number, email address and PAN number to fetch your latest credit score.
“Most lenders require borrowers to have a credit score of 750+ to be considered for a personal loan with collateral.”
To know more about the impact of low credit score on personal loan