There is no doubt that a debt consolidation loan can help you merge all your existing debts into one loan. It makes it easier to repay what you owe. But if you are not careful, you may end up worse off than earlier! You should make sure you know how debt consolidation loan works in India.
What is a debt consolidation loan?
A debt consolidation loan is a one-time loan that pays off all your unsecured debts (e.g., credit cards, personal loans, or payday loans). The interest rates on these loans are usually much lower than the rates you pay for other forms of debt. For a debt consolidation loan in India, you can use your house, land, furniture, car, or any other asset as security.
The primary goal of this loan is to consolidate all of your loans from various lenders. It enables you to make one single repayment for the whole amount at the end of the term. Your monthly payments will be reduced as a result. Once you have consolidated all your debt into one payment at one interest rate, tracking how much money you owe every month becomes easier. Ensure that you repay your monthly instalments on time.
Debt Consolidation Loans by Piramal Finance
Piramal Finance offers debt consolidation loans for people who owe many creditors a lot of money and want to avoid bankruptcy. Piramal Finance provides debt consolidation loans ranging from Rs 25 lacs to Rs 3 crore at 11.5% per annum. It allows you to apply for this loan against residential, industrial, or commercial property.
Piramal Finance allots you a relationship manager who assists you throughout the process. Other benefits of opting for a debt consolidation loan from Piramal Finance are that they offer doorstep service, higher loan amounts, and quick sanctions.
Indian citizens between the ages of 21 and 70 can apply for this loan. You can be a salaried employee of a government organisation, PSU, private firm, or NGO. Self-employed people can also apply for a loan, provided that they are qualified doctors, business owners, partners in a firm, or directors of a closely held private company. You need minimal documents like an ID, an address, income proofs, Form 16, bank statements, and collateral papers.
How Does a Debt Consolidation Loan Work?
Some lenders offer personal loans designed to consolidate student loans, credit card balances, and other types of debt. The first step is contacting a lender who provides this type of financing, like Piramal Finance. You can find out how much they charge for the service. The next step is filling out an application form, giving information about your income level, credit score, and how much cash you need for the loan.
A debt consolidation loan works in the following way:
- Loan TypeA home equity loan is the most common way to apply for a debt consolidation loan in India. Home equity loans are usually unsecured and not arranged by agents. You can apply directly to a bank or an NBFC. In some cases, you can take out a loan of this type for as little as 10% of your home’s value; in other cases, you can borrow 100%.
- Terms and ConditionsIndia’s debt consolidation loans are usually private loans between two parties, namely the borrower and the lender. In the case of government-sponsored loans, the government decides the interest rate and the loan amount.
- EligibilityYou must demonstrate some legal responsibility for the collateral property. So, you must show your legal capacity to sign mortgages and similar documents.
- Loan AmountA personal loan is generally limited to the amount in your designated savings or investment account. On the other hand, the amount you can borrow with a debt consolidation loan depends on your financial situation. A large credit card bill may prevent you from having a high loan amount.
- Allows SavingsSince the interest rate on a debt consolidation loan is usually lower than the rates you pay for your various debts, you may end up saving money with this loan. You can even be left with more disposable income to spend on things other than debt repayment.
- Prohibition on Borrowing MoreA debt consolidation loan restricts the lender from borrowing more money during the loan tenure, which could range from 3 months to 5 years. This helps you emerge from all debt and manage your finances with some accountability.
Owing money to too many creditors might drown you in a never-ending cycle of borrowing money and repaying it at high interest rates. Debt consolidation loans are a lifesaver for people struggling with debt. By taking out such loans, you can pull yourself out of a financial crisis.
With Piramal Finance, you can consolidate your debts into one loan with one monthly payment. It can help reduce stress and save more money every month. Paying off your debts is a vital step in foolproof fiscal planning that should not be overlooked. The interest rates depend on your credit history and vary from person to person.
So, if you want to apply for a debt consolidation loan, visit Piramal Finance and check out all their offers before making any decisions. You can also read more about such financial topics or check out more such products and services on their website.