If you are making timely payments of your loans, it will be reflected in your high credit score. You can enhance your credit score further through debt consolidation. In simple terms, debt consolidation means putting all your outstanding debt into one big loan. Here are things you should know about debt consolidation, its benefits, applying criteria, and its calculation.
Unsecured Debt Consolidation Loan – Best Debt Consolidation Loans
Avail a personal loan to consolidate all your debt. From lenders, you can get up to Rs. 25 lakh within 24 hours! With competitive interest rates and customizable tenors, you can repay all your debts easily. You may also get a flexible loan facility, which ensures you only pay interest on the amount you actually use.
|Also Read: Difference between Short Term and Long Term Loans
Is Debt Consolidation A Good Idea
A few tips to ensure how a debt consolidation loan can effectively help you reduce your debt include:
Negotiation can get you flexible repaying terms thereby helping you save money. For example, getting your floating interest rate changed to a fixed one can help you lower your total interest amount. You can also try to negotiate on lowering the annual fees you pay.
- Short Payment Term
Most people are of the opinion that lowering interest rate is enough in debt consolidation. But, even with a low rate, you may end up paying more if you have a long tenor. The best way to pay back all your debt and save money together is to have a shorter payment term along with a reduced interest rate.
- Pay In Lump Sums
Lump sum payments tend to reduce your debt, and in effect, lower your interest rates and loan tenor. With a lower interest rate, your total amount to pay reduces, hence saving you money in the long run.
- How Do I Consolidate My Debt
Once you have decided you want all your debt consolidated, here are some ways in which you can consolidate your debt and some important steps you can take to make it ultimately beneficial for you.
- Check your Credit Score
What is a credit score? To know your creditworthiness, lenders look into your credit score. A high credit score shows that you have a good repayment record. You do not miss your monthly repayments. Your lender could process your debt consolidation loan quickly if you maintain a good credit score.
- Take an Inventory of your Debt
Before you make any decisions, consider a list of all the balances you owe on your debts and what you want to consolidate. You would need to include your interest rates and EMI’s in this list. This can help you decide which debts are important and need to be consolidated.
- Research Debt Consolidation Options
While there are many lenders that offer debt consolidation options, consider looking for ones that suit your needs, like a lower interest rate and a shortened payment plan. Debt consolidation planning should be like shopping, looking around is important.
|Also Read: How to Negotiate Debt Settlement on Your Own
- Apply for a Debt Consolidation Loan
Once you have found the right plan, consider looking for lenders that attend to all your requirements. Consider all your options and apply for a consolidation loan.
- Debt Consolidation Calculator
A debt consolidation calculator is an application available online to help you calculate the loan amount you need to consolidate all your debts into one. A few benefits of such a calculator are:
- Helps you decide whether consolidating all your debt is a good idea
- Helps you plan your finances better
- Helps you adjust your consolidation plan as you wish
To Sum it Up
Negotiating with potential lenders can get you a customized plan that attends to all your requirements. And the repayment can help you improve your credit score along with it. You may take a read about how to improve credit score. With these and more benefits packed together, a debt consolidation can be your solution to paying back all your debt together!