P2P loan is the new medium of getting personal loans in Mumbai. India’s financial capital is now more reliant on P2P lending companies to procure personal loans at a quick rate and through a seamless process. The rate of interest levied by the P2P lenders is feasible to the under-banked individual with low or no credit score. One of the most popular loans applied by Mumbaikars on the P2P platform is the debt consolidation loan.
Debt consolidation is a simple method of consolidating several debts and replacing them with one. Sometimes an individual may accumulate several loans (taken for different purposes) or overshoot the limit on their credit card(s). The presupposition of the ability to repay the EMIs of all loans taken or bills for credit cards may sometimes land individuals in hot water. In case of such a scenario debt consolidation is the ideal solution.
Debt consolidation loans at low interest rates aids a person clean up previous loans and deal with only a single EMI. However before applying for a personal loan in Mumbai for debt consolidation it is better to understand the pros and cons of this loan.
Ending multiple loans with a single loan will no doubt ease the pressure off of the borrower but there are a few cons associated with it. It is always better to gauge both the pros and cons of a debt consolidation loan before opting for one.
Ending in a debt cycle
The biggest problem with a debt consolidation loan is ending up in a debt cycle. This usually happens with those using credit cards recklessly. After paying off a credit card debt with a loan, people start using the credit card again and thus pile on additional debt hampering the repayment capacity.
Additional charges and penalties
While taking a loan, any loan, the processing fees and other charges should be added to the entire loan amount to estimate the overall cost. Also, many lenders charge a fee for foreclosure of existing loans. All these charges and penalties must be deliberated before opting for a debt consolidation loan.
Several options are available to consolidate loans but choosing the best personal loan in Mumbai should be meticulous. Take the charges and penalties into consideration and do not fall into a debt cycle.