Personal loan is a collateral-free and unsecured type of loan that doesn’t require the purpose to be defined for what it is going to be used for. Hence, at times to fulfil multiple requirements people resort to multiple personal loans. And the more interesting part is that they take it from different lender’s at different EMI dates, making it burdensome to manage and remember to pay them on time. Having different EMI dates means you can’t simply afford any uncertainty, like to deal with basic nature life. What makes it even more challenging that having different EMI to be paid to different lenders with different interest rates, loan amount and tenure, simply means you are paying interest on loans at three different places for multiple personal loans. Hence paying more interest.
Debt has a sneaky way of snowballing. Having said that, there is a solution wherein you can manage your personal loan EMIs and will be able to save some money in the form of debt consolidation by merging all loans into one single loan. It will ensure the timely payment of your loan and make your CIBIL tick above. Read this post to know the benefits in detail and how you can merge loans.
Benefits of Personal Loan Merger
Ease of repayment owing to a single EMI
Having only one EMI to pay will eliminate the risk of missing payments and paying the penalties and charges that they come with. Besides, merging your multiple loans into one will help in reducing your expenditure on interest payments. This is because paying the personal loan with a lower interest rate and that too with a single EMI is more affordable as compared to that of multiple EMIs.
Missing your payment may hamper your credit score, relationship with the lender, future chances of getting a loan when there is a requirement, etc. Doing this will allow you to make payment every month, thus making it a whole lot easier.
Lower interest rates
You may find the interest rate charged for this personal loan lower than the interest rate you currently pay for these multiple loans. In such cases, merging your loans into a single loan is a viable option. Having said that, do explore the interest rates of different lenders before applying to a specific lender.
When you choose to merge the loans into one, you start saving on interest and preventing default payments and your monthly outflow is likely to reduce significantly as well. As a result you can efficiently cut on expenses and save more. Make sure you use the Personal loan eligibility calculator to check how you can reduce your monthly cash outflows on EMI before applying.
Fixed repayment tenure
Usually, each lender has different policies of sanctioning the loan. They may offer you a loan for 1 year, 3 years or maybe for 5 years. So it will be a hassle to keep track of the tenure as well and there will be constant change in your financial plans. You will need to repay the amount within the time period as determined by the lender. Merging multiple loans into one can help you in getting a fixed tenure, loan amount, interest rate, and of course a fixed EMI. Knowing how much you will have to pay to the lender month after month can help you plan your finances and pay off your loan without any hassles.
Boost credit score
Outstanding debts affect your credit score in a bad way. Having multiple personal tracking your EMIs can become a hassle. If you happen to miss any payment on the due date as specified by your lender it may affect your credit score and make it difficult for you to avail loans in the future.
To avoid such troubles, you should consider merging your multiple personal loans and convert them into a single one. Doing this will make repayments significantly easier since you will only have to pay a single EMI month on month basis, thus reducing the chances of missing the payments. The timely payment record will help maintain a healthy credit score.
Faster approval and disbursals
Choosing a debt consolidation loan from the right lender can help you save time as well. Leading loan providers including NBFCs offer you instant approval and disbursal within 24 hours for document verification. If you have provided correct details and authentic documents and have done no defaults in the existing loan then getting approval for the merger and disbursement is a piece of cake. All you need to do is make payments timely and provide your correct details.
Helps in making effective financial plans
Since the date of repayment will be one, you can plan your finances accordingly. This will help you figure out which expense to have and which to do away with. With that done, timely payment will be more or less a formality.
How does it work?
Assume you have three personal loans and want to merge them into one. You just need to approach a lender offering a lower rate of interest. The lender will ask you to get the repayment schedules of all the three loans accompanied by a non-objection letter (NOC). Before saying YES, the lender will check and validate the repayment tracks of the loans. Only when the repayment track is found smooth and without any default will the transaction get approved. Also, you need to pay a flat fee which remains quite less in comparison to the usual personal loan fee.
But do remember to check your eligibility for Personal Loan before applying for one. This will ensure that you save time and are able to tackle your debt as efficiently and quickly as possible.