Personal Loan for debt consolidation: Is it worth it?

Personal loans can be used for many reasons, including debt consolidation. Here is how you can consolidate your debt and improve your credit score through a personal loan

It can be difficult to keep account of your different loans. Each might have a different EMI amount and payment due date, and you might end up missing a payment because of confusion. A debt consolidation loan can help avoid this problem, consequently saving your credit score as well. Consolidating your loans into a single loan could simplify your finances and make them easier to repay.

The personal loan interest rates for debt consolidation are affordable and simple to avail. The sections below will tell you everything about online debt consolidation loans.

What is a debt consolidation loan?

Debt consolidation is the practice of consolidating various debts into a single loan with a reduced interest rate. When you consolidate debt using a personal loan, the funds are used to repay the separate loans. While some lenders specialise in debt consolidation loans, you can consolidate your debts with ordinary personal loans. Some creditors pay off debts on the borrower's account, while others disperse the funds so that the borrowers can make the payments on their own.

Why choose a personal loan for debt consolidation?

Personal loans for debt consolidation consolidate many balances/debts into a single amount that must be paid monthly. Here are a few reasons why you should consider taking out a personal loan to consolidate your debts:

Single EMI payment

Keeping track of several EMI payments is inconvenient. If you fail to repay any of your debt loan EMIs on time, you may be charged a penalty, and your credit score may also suffer. You can consolidate your debts with a personal loan to avoid this problem. It focuses your attention on one EMI, making repayments simpler.

Lower interest rates

The right lender can provide you with a personal loan for debt consolidation at an affordable interest rate. IDFC FIRST Bank is one of the lenders you can consider. The interest on personal loans at IDFC FIRST Bank begin around 10%, although you must have a good credit score to get a better interest rate.

Flexible repayment term

Many lenders offer flexible repayment terms on personal loans. You have the liberty to decide your repayment terms. You can choose to pay back the lender in a few months or a couple of years. Some lenders may also help you decide your repayment schedule.

Better credit score

Your credit score may suffer because of multiple loans. Taking regular loans shows that you need credit regularly. A personal loan to consolidate your debt could address this problem and positively impact your credit score.

Thanks to technology and easy access to credit, many people choose online personal loans to solve their existing debt. IDFC FIRST Bank is among the best lenders to get an instant personal loan for debt consolidation. You can apply for the loan digitally through our mobile bank app and get the loan amount disbursed in your account within hours.

Disclaimer

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.