Personal Loans In Mumbai For Debt Consolidation

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.

Pros and Cons of Debt Consolidation Loans

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.

Pros of debt consolidation

• Lower total payable EMI: The main purpose of this type of loan is to reduce the total payable EMI. Several EMIs for different loans and bills can be a burden to monthly expenses. A single loan to pay off other loans substantially reduces this monthly cash outflow.
• Fixed regular EMI: Different loans have different EMI amounts and payment dates. It is a hassle to keep track of them. By taking a debt consolidation loan and paying off all other loans will leave an individual with only one loan to worry about. By opting for a fixed interest rate loan the EMI will remain constant throughout the loan tenure.
• Unsecured loan: Personal loans are unsecured loans and do not require any collateral, security or guarantor. That’s why this loan is quick and simple, and meets the loan applicant’s need exigently.
• Repayment tenure: As mentioned earlier different loans have different EMI date and loan repayment timeline. Even setting the auto debit feature of the bank account can prove cumbrous. A single personal loan has a fixed tenure that lets the individual plan future finances.
• Improve credit score: Several loans and credit card usage can lower the credit score of an individual. And missed EMIs can bring down the score further. One loan and its timely repayment will in fact increase the credit score of the individual.

Cons of debt consolidation

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.