Should You Opt for Personal Loan to Pay Your Debts?

by Vinaya HS on May 14, 2017

in Finance

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The Burden of Debt is not one that everyone can handle well. For some, it is the idea that you have to pay more than what you borrowed with steep interest rates and finance charges. With multiple offers on credit cards and other means of financing, it is tempting to acquire things on credit. It seems hassle-free to lead a life without any debt. But realistically speaking, that’s not always possible.

Everyone knows that missing a credit card payment can land you into a soup. Missing credit card payments is one of the cardinal sins of personal finance. While most are able to make timely payments owing to the fear of late fees & penalties, every now and then an unforeseen expense comes along and wrecks your finances. If credit card bills and other expenses are piling up weighing you down, it may not be such a great idea to let your credit card hurt your finances. It may be time to prepare a debt consolidation strategy with a Personal Loan – rather than pay the exorbitant interest rates on missed credit card payments.

People also like to maintain a certain lifestyle and this usually entails spending on different things. So, avoiding consumption altogether is not always possible. However, by intelligently managing your expenses, you can live the life you want and pay for it on a timely basis. This is where a personal loan comes in. You can avail a personal loan to consolidate your debt.

A debt consolidation strategy implies merging separate loans into one single loan. This also includes loans taken from different financial institutions and on credit cards. You can simply refinance all outstanding loans with a new loan from a single institution. The advantages of this are that you get to pay a uniform rate of interest on all the loans on a single day. This is especially beneficial for those running high credit card dues. That’s because there the rates can be more than 40% per annum.

Using a personal loan to your advantage and make regular payments while paying a predetermined equated monthly installment could be the answer to your financial woes. The jury is always out on how to best manage your personal expenses. While some believe that taking on external debt in the form of a loan should best be avoided when it comes to paying your personal expenses, the views are changing.

A Personal Loan can be used for multiple purposes. Getting a sanction for these loans is easy as well. Lenders look at the applicant’s credit score, income, and repayment capacity. Unsecured Personal Loans usually come with higher interest rates. But with collateral, you can avail reduced rates.




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