When different due dates, interest rates and repayment schedules all combine together each month it can often become hard to handle the MI payments to make sure you can continue to stay on track (without going over) against your monthly budget. Therefore, if you’re managing a number of different loans (Which generally come with multiple monthly payments) it may be worthwhile looking into a Debt Consolidation Loan as a means to simplify your financial situation by combining your existing debts into one single loan providing a fixed repayment schedule and starting from an interest rate of @10.5%.

In addition to providing people with the ability to simplify their debts, Debt Consolidation Loans can be very helpful in achieving financial goals (providing you with a place for everything but making sure you also have enough money left over each month) and allow you to continue using credit cards for short term purchases, when you didn’t necessarily have the resources before to do so.

At 5Sikka, we offer borrowers options for their Debt Consolidation Loans to assist them in working through their existing debts using a more structured repayment plan.

When it comes to obtaining a debt consolidation loan, they may range from @10.5%, with the interest rate based on various factors, including:

credit score; income; number of outstanding debts; number of different types of loans; amount of loan needed; and the length of time needed to pay off the loan.

With a lower rate, it allows for a significant lowering of the total amount of money owed compared to the original amount due to credit cards and/or multiple types of unsecured loans.

Why use a debt consolidation loan?

One monthly payment versus multiple payments

Rather than attempting to manage multiple payments each month, the borrower will only have to manage one monthly payment.

More accurate budget

A fixed repayment schedule will allow for more accurate budgeting and accurately tracking of expenditures.

Possible lower rate of interest

The combining of different types of debts, especially when using a high rate for a credit card, into one payment should ultimately lower the total of all interest that would have been paid had the debts remained separate when they were originally obtained.

Flexible repayment periods

The borrower should have the option of choosing either a short repayment period or a longer arrangement based upon what will be most comfortable for their budget and income.

Decreased anxiety

Generally, it is easier to manage one loan rather than manage several loan accounts with different lenders and different due dates.

Who is Able to Apply for a Debt Consolidation Loan?

In general, a debt consolidation loan is available to:

• Salaried individuals
• Self-employed/Freelancing individuals
• Self-employed/Professional runners
• Individuals that hold a current debt

Each lender will have its own eligibility criteria based on lender guidelines, and various financial profiles will influence your ability to apply for a consolidation loan.

What do I Need to Provide to the Lender to Qualify for a Debt Consolidation Loan?

When applying for a debt consolidation loan with a lender, you will need:

• PAN Card
• Aadhaar
• Salary slips or proof of income
• Current bank statements from your current accounts
• Lenders may request other documentation during their verification process

What Are the Benefits of Debt Consolidation To Increase Financial Stability

Having many loans with different due dates can lead to financial stress as missed payments become commonplace, and the lender begins to take aggressive recovery action against loans. A debt consolidation loan provides a plan which helps the borrower to pay off their debt by combining the different loans into one loan with an organised way of repaying the debt.

Benefits of debt consolidation include:

• Easy to keep track of payments due (EMI)
• Easier to manage your cash flow
• Reduced risk of missing payments
• Having a structured way of planning repayments
• Being more disciplined in your monthly budgeting

If borrowers make timely payments, they will also create a positive history on their credit report.

Things to consider before applying for a debt consolidation loan:

Total Amount of Outstanding Loans – Know the exact amount of debt that you will be consolidating.

Interest Rates of Existing Loans – Compare the current rates of your current loans to the new consolidated loan.

Interest Rate – Make sure you understand all of the fees and costs associated with the loan.

Tenure – Longer tenures will result in lower payments (EMIs) but a higher cost of interest in the long run.

Your Capacity to Repay Each Month – You should select an EMI that fits into your monthly budget considering your annual income.

Borrowers Select Debt Consolidation Loans

Many people select debt consolidation loans because they allow for a more manageable structure for repayment during difficult financial times.

Some reasons are:

• Too Many Active EMIs
• High Interest Rates on Credit Cards
• Difficulty Managing Payment Due Dates
• Desire for Better Financial Organization
• Need to Simplify Monthly Expenses

5Sikka will help borrowers find the best solution for their loan needs with clear and easy-to-understand processes as well as flexible repayment options that meet their individual financial needs.

Ways to Help You Manage Your Debt More Effectively

Don’t increase the amount of debt you currently owe while you are working to pay off your existing debt.

Pay Your EMIs on Time

Timely payments create discipline in managing your personal finances.

Track Your Monthly Costs

Creating a budget helps you to consistently pay off your debt.

Limit Your Use of Credit Cards

Avoid accumulating high credit card debt while you are repaying your loans.

Have an Emergency Savings Account

Having even a small emergency savings account can help if you need money in a short amount of time.

Common Questions and Answers (FAQs) 

What is the lowest possible interest rate on a debt consolidation loan?

Debt consolidation loans usually range from 10 to 12 percent for borrowers who qualify; however, it is ultimately determined by lender policies. 

Can I combine credit card debt and bank loans into one repayment plan?

Yes, many people combine their credit card debts along with their current personal loans into one repayment plan. 

Does using a longer repayment plan lower my monthly payment? 

In some cases, yes. Longer repayment periods may lower monthly payments by extending the time frame in which your payment is due. 

Is a strong credit score needed for approval? 

A strong credit score typically increases your chances of being approved and receiving a better interest rate. 

Can self-employed people apply to get a debt consolidation loan?

Yes, self-employed professionals and business owners can apply for approval under certain criteria, including financial stability and lender requirements. 

How long does it take to receive my approval?

Banks may take anywhere from 2 to 4 weeks to complete all of the paperwork necessary to grant an approval. 

Summary 

If you are looking to lower interest rates and consolidate debt, Consider applying for a debt consolidation loan that has a @10.5% interest rate. Using a debt consolidation loan allows you to combine several debt obligations into one low monthly payment, thus potentially improving your overall financial organization, reducing the stress that comes with making many different types of monthly payments, as well as creating a clearer picture for monthly budgeting.