Consolidate and Conquer: Your Guide to Debt Consolidation Loans - Loan Trivia


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Thursday 11 January 2024

Consolidate and Conquer: Your Guide to Debt Consolidation Loans

Debt consolidation refers to the process of combining all of one's loans into a single loan. When an individual decides to consolidate their debt, they take out a big loan and use it to repay all of their other loans. Once this is done, the individual has only one loan and EMI to take care of. Thus, debt consolidation makes it easier for people to manage their debt. Debt consolidation is a specially good option for those individuals who miss paying their loan EMIs often as they are bad at remembering due dates. Debt consolidation also helps borrowers become debt-free quickly by helping them switch to a lower-interest rate loan. 

By switching to a lower interest rate loan, borrowers also get to reduce the total cost of borrowing the loan. Lastly, debt consolidation also allows borrowers to improve their credit scores. Repaying your loan before the agreed tenor can work in your favour. Once you have repaid the debt, inform your credit information agency and they will update your credit score. Having a good credit score should be high on your priority list as a good credit score makes it possible for people to avail themselves of credit easily. 

If you are planning to consolidate debt, you must consider availing yourself of a loan against property.

Loans against property are loans availed of against a property that a person owns. The pledged collateral could be a residential or commercial property or even a piece of land. The key reason why one can use debt consolidation loan as such type of loans against property funds come with zero end-use restrictions. Thus, the borrower can use the money to pay off all their other debts. Let us look at some other reasons why you must choose a loan against property to consolidate debt. 

Reasons Why You Should Consider Availing Yourself of a Loan Against Property to Consolidate Debt 

1. Low-Interest Rates: With the right credit profile, a borrower can avail of a loan against property at an interest rate as low as 8.50% per annum. Such a low-interest rate automatically translates into affordable EMIs and low cost of borrowing. Thus, by helping individuals switch to a lower interest rate loan, loans against property or property loans help borrowers save money in the long run and also become debt-free without feeling hassled. 

2. Long Repayment Tenor: Loans against property come with a long repayment tenor. Borrowers can choose to repay their loan over a period extending up to 20 years. Such a long repayment tenor further eases the burden of loan repayment.

3. Large Loan Sanction: If you avail yourself of a personal loan to consolidate debt, you will be able to avail yourself of only up to Rs.25 Lakh. However, the upper limit is much higher in the case of loans against property. Provided you pledge collateral whose resale value complements the loan amount, you can get a loan sanction up to Rs.5 Crore. In short, a loan against property is one of the only loan options that give borrowers access to such substantial funds that debt consolidation becomes a possibility.

These are some of the reasons why you must consider availing yourself of a loan against property to consolidate debt. If you are planning to apply for a property loan, start your research by looking for a reliable and reputed lender.

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