2 min read
25 May 2021

Consolidating debts increases financial efficiency. Rather than allowing your debts to increase over time, you can take stock of all your dues and consolidate them with a single loan. This reduces your monthly financial burden and helps you manage your loan better. This is just the first of many benefits that debt consolidation offers. Here is a closer look at some ways in which it helps you manage your finances better.

Offers a low interest rate loan

Let’s assume you have several pending dues including credit card debts and other term loans, which you have taken at different points of time. Now, over the years, these big and small debts have amassed to a sizeable amount. This puts a burden on your finances, as every month you are diverting a significant part of your income towards repaying these debts. Consolidate these loans and bring them under the umbrella of a single loan. This enables you to pay them off quickly and makes managing the debt easier.

You can get access to a larger loan by taking a loan against property. Pledging a property will also give you access to a loan with a lower interest rate.

Lowers your monthly expenses towards the loan

Debt consolidation wraps up all your debts and dues under one loan. This not only simplifies matters since youonly have to pay one EMI every month, but also lowers the EMI amount considerably. Let’s assume that you arepaying Rs. 5,000 for each loan, each month. If you have 4 loans, you willpay Rs. 20,000 as EMIs, while the principals cumulatively add up to over Rs. 10 lakh. Now, once you pay off the debts using the loan against property, you will have only one loan to clear off, whose monthly EMI will be less than Rs. 20,000, especially if you choose a long tenor of up to 20 years.

Additional Read: 3 ways to ensure that you don’t default on your loan against property

Improves your CIBIL score

Too many ongoing loans and pending debts reflect poorly on your credit score and bring it down. When you pay it off using one loan, your credit score will instantly improve. Moreover, as you repay your debt consolidation loan, this score will improve further. If you choose a debt consolidation loan with flexible prepayment terms, you can use this feature to further boost your CIBIL score.
 

DISCLAIMER:
While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent inaccuracies or typographical errors or delays in updating the information. The material contained in this site, and on associated web pages, is for reference and general information purpose and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. In case any inconsistencies observed, please click on reach us.

*Terms and conditions apply