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Here’s How You Can Use a Personal Loan to Clear Your Debt

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By : John Peterr    99 or more times read
Submitted 2018-04-25 06:35:21
Are too many unpaid bills giving you sleepless nights? What measures would you resort to if you are facing a cash-crunch to pay your current EMIs?

Take a Personal Loan and use it to pay off your all your debt.

Consolidate your debt

If you have 4 credit card debts at 18%, 17%, 16% and 19%, your average credit card interest would come up to 17.5%. If you manage to get a Personal Loan for 12% or even 14%, there would be lower monthly payments and you can pay off your debt.

Too many credit cards

What happens if you have 5 or 6 credit cards? The major problem is that if you do not pay off those dues regularly, the interest rate can go as high as 22%. The simplest solution would be to consolidate-or merge- all the debts into one loan, and pay the dues.

Things to ponder over

Before you get a Personal loan for debt consolidation, you should go through your credit score. If you have a really bad score, the bank might reject your application for another loan.

Look at the amount that is outstanding. If you have a huge debt to clear, a Personal Loan is a good idea. If the amount is small, you can go for balance transfer from your credit card.

What are the benefits of using a Personal loan for debt consolidation?

One of the major advantages is that a Personal loan forces you to repay your debt on time. It also helps you start saving and plan for the future wisely.

When not to take a Personal Loan?

A Personal Loan for debt consolidation is recommended if you receive a lower rate of interest when compared to the existing debt, or if it helps you pay off your dues faster. In case you are a victim of poor credit history, you will end up paying more for the loan taken.

Applying for a Personal Loan

When you opt for a Personal loan from Bajaj Finserv, you get an instant approval within few minutes and the payment is done in your bank within 72 hours. You are entitled to receive loans of up to Rs.25 lakh and you can repay it in a tenor of 24 to 60 months.

Documents Required for Loan

The bank will need to see your financial stability. You can show the previous months’ salary slip, bank account statement of last three months and employment card. For proof of identity, valid photo-based documents like passport, PAN Card, Voters Card and Aadhar card is accepted. For residential proof, documents like current month's’ electricity bill or mobile bill and ration card are eligible documents.

Apply online for a loan, and check your eligibility with help of a simple calculator.

Other ways to use Personal Loan

Apart from paying off debts, you can use a Personal Loan for the following.

Home Renovation

Whether you want a minor repair or a major construction, you can take advantage of Personal loans to build the house of your dreams. You can avail the benefits of fixed interest rates. You can take the load off credit cards and prevent additional interest from piling up.

Finance Your Dream Wedding

Use a Personal Loan to fund marriage expenses such as cost, venue, place of reception, bridal clothes & jewellry and accommodation for guests.

Bottom line

Take a look at the best available options to finance your lifestyle or clear long dues. Take up a Personal Loan for debt consolidation if your main concern is to get rid of the debt hanging over your head.

There are other ways to use Personal Loan, say, finance a wedding or pay for major home improvement. Use your decisions judiciously and enjoy the benefits.

Author Resource:- Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has worked extensively in the finance sector and has been dealing with the entire range of investment and finance. He has been dealing with a host of reputed clients associated with the financial industry. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management. Aman has also amassed a great name for himself as a financial blogger. He usually writes on various articles on different topics like personal loan, home loan, and investment ideas.
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