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When you delay debt repayments, you have to face increased charges from late payments, lowering of credit rating, and a general loss of trust from the lender or individual from whom you’re borrowed.
A personal loan is a type of loan which can be used to fund any kind of expense. From marriage expenses and education to fixing your house or funding a venture, they can be used for just about anything. One way to utilise it is by consolidating your debts.
Let’s look at the benefits of using a personal loan to repay debt.
Being charged a Lower Rate of Interest
The interest rate charged is usually lower than the current interest rates. This makes a personal loan a viable option for debt consolidation. Just ensure that you compare the interest rates charged by various lenders before applying.
Clearing a high-cost debt
High-cost debts can significantly impact your finances. They can affect your monthly budgets as you would be spending a large portion of your income paying them off. A personal loan can help you pay off a high-cost debt within a single payment. Once you pay off this high-cost debt, you can pay off the loan via affordable EMIs.
Dealing with a fixed Repayment Tenure
A personal loan is available for a period of 1 to 5 years. By knowing the exact amount to be paid every month to repay the loan within the stipulated time, you can manage your repayments well.
Facility to repay the loan in affordable EMIs
Personal loans are one of the most beneficial products offered by banks. They don’t come with any restrictions on how you use the loan amount, as long as you repay it. You can repay it in affordable EMIs, by choosing a tenure that suits you. Usually, banks allow a minimum tenure of 1 year and a maximum tenure of 5 years, for loan repayment.
Getting to apply online
Many lenders let customers apply online. It speeds up the entire process and lets you access the funds much quicker.
Enjoying a timely approval
Most applications get approved on time. To ensure this, you must provide all the required documents and make your application taking into consideration the impact on your credit score.
Enjoying a quick disbursal
As soon as your application is approved by the lender, the loan amount will immediately be disbursed into your savings bank account. Products such as an instant personal loan are known for such features.
Having no obligations
Borrowing money from friends and family in times of crises could put you into an obligation that you wouldn’t likely enjoy. Being indebted to people you know could affect your relationships if you fail to repay the loan within the time promised. A personal loan lets you pay off your existing debt without having to face any personal obligations.
Having an option of Prepayment
Depending on the lender, you can also prepay your loan after a certain fixed/lock-in period. You could be charged a nominal fee for prepayment, but you would get to pay off the loan in a much shorter span.
The benefits of using a personal loan to repay debts are aplenty. Know more about IDFC FIRST Bank’s personal loans on our website or the IDFC FIRST Bank Loans app. You can apply for a personal loan online with us today and enjoy a debt-free life.
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.