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Should You Use Personal Loans to Consolidate Your Debt?

Are you fed up of paying multiple loans? Don’t worry; we are here with a solution for you to get with the problem. A lot of individuals face the burden of paying multiple loans together. This burden can easily be reduced by following various methods.

Many individuals ask the question, is it possible to consolidate unsecured loans with a personal loan? The answer to this question is yes. You can consolidate your unsecured loans with a personal loan. The process can be so with easy steps. Your unsecured loans include your credit card loan, store credits, and other shopping pending credits. If you cannot keep track of all the records, you can opt to consolidate your loans. This can be done by taking up a personal loan. All you have to do is take up a personal loan, use the amount to pay back all your unsecured loans. By this, you will have to pay only a single loan with an individual interest rate. Singapore fastest personal loans are also available in many institutions.

Institutions are offering a personal loan to individuals. You can avail of your loan from any institution nearby. But the most crucial step you have to follow is to do, and in the process of any institution you are planning to go with. This is because there are hundreds of fake institutions in the country sitting to loot your money. These institutions initially give you high hopes. But once you are into their trap, you are gone. They will put you in a vast cycle of debt. Coming out of this vicious cycle becomes impossible. Thus it’s essential to do in-depth research before getting into any institution for a loan. Debt consolidation personal loans are useful to pay back your other unsecured loans.

DEBT CONSOLIDATION WITH PERSONAL LOAN

The best way to consolidate your unsecured loan is by doing it via a personal loan. This is an excellent way to manage your unsecured loans. The process works like this.

  • First, you take a personal loan from a different financial institution.
  • The amount taken from a different financial institution in the form of a personal loan is used to pay back unsecured loans.
  • The unsecured loans are completely paid off and clear it in one shot with interest rate.
  • Next, the individual move towards the personal loan bank. The personal loan bank gives the total amount of loan taken to the Individual.
  • Now on getting the total amount, the bank will give you the details of the loan’s interest rate and tenure.
  • You will start paying the EMI to the personal loan bank every month with an interest rate.
  • You will be paying a single EMI on a personal loan.
  • The unsecured loans are completely clear, and you are not supposed to look back on them.
  • By clearing the unsecured loans, you do not come out of the debt ultimately.
  • You get into another debt called a personal loan. You have to clear the loan by paying EMIs every month.

DO YOU KNOW WHAT IS A PERSONAL LOAN?

A personal loan is an unsecured loan. As a borrower, you can borrow a loan between $1000 to 15000 dollars. There are some lenders available in the country who will let you borrow even $25,000 as personal. The tenure of the loan varies between 3 to 5 years. It’s up to you to pay back the loan.

Personal loans are unsecured loans. This means that the loan is not secured against anything. Whereas on the other hand, side secured loans are secured against your property or asset.

A personal loan is not secured against any property or asset. This is the main reason it is called an unsecured loan. A personal loan can be taken as a debt consolidation loan only for other unsecured loans. The other unsecured loans can either be your credit card loan or your shopping credits. These unsecured loans can easily be paid back using other unsecured loans. These options come with various terms and conditions. This is because you are using one loan to fulfill the other.

ADVANTAGES AND DISADVANTAGES

There are various advantages and disadvantages of using a personal loan to consolidate your debts. It is completely up to you whether you want to go with the decision or not. Let’s study the pros and cons of it in detail.

ADVANTAGES

ONE PAYMENT: The main advantage of debt consolidation is that you have to make only one payment in a month, unlike the other unsecured loans where you pay different loans amounts to various institutions. This creates a lot of confusion in the mind of the person. The main advantage of debt consolidation is you have to make only one payment to one institution using one single rate of interest.

INTEREST RATE: Another advantage of debt consolidation is you can reduce the interest rate payable. The interest rate of a credit card varies between 25 to 30%. This is quite high compared to the interest rate of a personal loan. The main advantage of debt consolidation is that you can pull out yourself from paying more on the interest rate. The amount you save on interest can be used to make further payments of personal loans. By doing this, you can easily reduce your loan burden in a limited period.

LONG TENURE: The main advantage of taking that consolidation plan is you can increase your loan tenure. The tenure of a debt consolidation loan is used in more than a credit card loan. You can quickly clear the loan within a tenure of 5 years. You get five years in your hands to make the payment of your loan.

DISADVANTAGES

MORE INTEREST: The tenure of the debt consolidation plan is up to 5 years. When you clear your payment in 5 years, you tend to pay more interest than a credit card loan.

FORMALITIES: The n number of formalities present in the form make you go bonkers. If you are planning to take up debt consolidation, be ready to face the company’s lengthy processing procedures.

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