Availing loans has become a dependable move to achieve financial goals on time and with ease. However, servicing multiple loans simultaneously can be very stressful and can land you in a debt trap if you don’t manage them well. That’s why the key to getting debt-free sooner is to repay your loans as quickly as possible. You may have heard of a personal loan as an all-purpose loan that can fund both personal and financial needs. What you may not know is that you can also avail debt consolidation loan purposes. Read more about a personal loan as a debt consolidation loan below and find answers to some of the most common questions pertaining to this loan.
How can you get a personal loan to consolidate debt?
You can apply for this type of loan either directly by approaching the lender or via your pre-approved personal loan offer. A pre-approved personal loan is the same as any other personal loan. The only distinguishing factor is that a pre-approved loan offer is a semi-approved customised financial solution, which your lender extends to you because of your creditworthiness and credit score. Even so, a pre-approved offer doesn’t necessarily mean that your loan is fully approved. It only indicates:
- That you have qualified for the loan as you have met the lender’s personal loan eligibility criteria in one go.
- The loan amount that you have qualified for.
If you think the offer meets your requirements, you can go ahead and apply for it and enjoy quick approval without any hassles.
Is it smart to get a personal loan to consolidate debt?
You may be sceptical about availing a loan to repay a number of other loans. But, availing a personal loan for debt consolidation via a pre-approved offer is, in fact, one of the most effective ways to get debt-free quickly. Read on to know why.
- Depending on the lender that you apply with, you can access a high-value loan, sufficient to repay all your other debts. For instance, Bajaj Finserv offers personal loans for debt consolidation of up to Rs.25 lakh at affordable interest rates and flexible tenors ranging from 12 to 60 months.
- Since you have multiple loans with varying interest rates, the overall cost of credit is sure to be high. With low personal loan interest rates applied to a debt consolidation loan, you can repay your loans at reduced overall credit cost.
- As the offer you have at hand is pre-approved, you don’t have to worry about meeting personal loan eligibility criteria and do not have to submit reams of documents or wait for long until your application gets fully approved. All you have to do is apply for an offered loan and enjoy instant approval. Bajaj Finserv offers quick approval and disbursal within 24 hours, so you can repay all your other loans in a snap.
- Managing multiple debts can be an ordeal as you have to pay multiple EMIs on time. This juggling act can also get extremely difficult after a point, especially when you are facing a cash crunch. With a single loan, management becomes easier. This is because you are only left to repay one EMI every month.
- In case of emergencies you may have to use a portion of your budget to meet an unplanned expense. This may result in delay of EMI payments, which negatively affects your credit score. Conversely, by consolidating your loans you can get rid of all these burdensome EMIs at one go. This will also improve your credit score instantly.
What credit score is needed for a debt consolidation loan?
Since your credit score reflects your creditworthiness, lenders require you to have a good score, i.e. 750 and above when applying for a loan. This is because a good credit score implies that you are financially responsible and can repay the existing loan without any hassles. A bad score, on the other hand, means that you may default on debts. In fact, lenders don’t extend pre-approved loan offers if you have a bad repayment track record. However, you may be able to apply for a personal loan for debt consolidation in spite of a low credit score if you showcase a steady income and meet all the eligibility criteria.
Is it hard to get approved for a debt consolidation loan?
The secret to increasing your loan approval chances is to prove to your lender that you are financially responsible, have enough means to repay the loan, and have a good credit score. So, if you fulfil all these requirements, getting an approval for a debt consolidation loan is easy!
To enjoy instant approval, check your pre-approved loan offer from Bajaj Finserv by submitting simple details and benefit from customised deals on loans and other financial services via a hassle-free application.