Are you looking for a solution to help you get out of a debt trap? All it takes is little financial prudence to enjoy peace of mind.
Debt is sneaky and has a peculiar characteristic of snowballing. If you are a victim, it is time to take action. Personal loans are the need of the hour. And if you are still not aware of how they can help, read below to understand how a loan such as an Alex Bank – personal loan can be a real savior in a time of financial crisis.
What Is A Personal Loan?
A personal loan can be used for financing various expenses. You can pay for your wedding, fund your education, and even pay off debts with this credit. This article will help you understand how you can use personal loans to consolidate debts and resolve your debt troubles once and for all.
Why Opt For Personal Loans To Pay Off Existing Debts?
Listed below are a few reasons how a personal loan can lessen the existing debt burden.
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Low-Interest Rate
Personal loans charge a comparatively low rate of interest. If interest rates on your outstanding debts are higher than what your personal loan lender is offering to you, then you are better off taking a personal loan and closing off your past debts.
Just make sure to compare the interest rates charged by different vendors before you settle on one.
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Affordable EMIs
High-cost debts could impact your monthly finances. You are forced to pay a huge part of your monthly income towards these high-cost debts, leaving you with insufficient funds to meet your lifestyle needs. It is good to opt for a loan like the Alex bank – personal loan and pay off the high debts in a single payment. You can then continue paying off the personal loan through an affordable EMI.
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Better Financial Management
Personal loans are usually disbursed with a repayment option of 1 to 5 years. Thus, you are free to choose the payment timeframe and evenly spread out the monthly EMI amount. This saves you from stretching your monthly budget, which lets you meet your monthly needs and pay off the debts with ease.
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Live without Obligations
Many people resort to borrowing money from friends and family to pay off their existing debts. However, this makes you feel indebted to the people around you. Failing to pay off the borrowed amount within the timeframe promised may even strain your relationship. A personal loan is a better option as it lets you pay off outstanding debts without having to rely on help from friends and family.
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Enjoy Prepayment Option
The majority of lenders let you prepay the loan amount after a fixed tenure. So if you have cash in the future, you will be able to close off your personal loan and live debt-free. The prepayment charges are nominal, making it an economically smarter option as well.
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Timely Approval and Quick Disbursal
Personal loan approvals and disbursements do not take too long. It is much quicker than applying for other types of loans. If you have your documents ready and your credit score is good, you only need to wait for your loan to get approved by the lender.
This should hardly take any time. Once done, the loan amount is transferred to your bank account directly. Usually, you will receive the loan amount within hours of putting in your personal loan application.
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Single EMI Payment
If you have several loans to pay, keeping track of various EMI payments can be a hassle. There is always a risk of missing an EMI payment, which draws a heavy penalty. It also affects your credit score, which can make you less eligible for any future loans.
A personal loan lets you consolidate all your debts, meaning you only have one payment to make every month. This makes it harder for you to forget or miss the EMI payment, thus saving you from embarrassment.
Taking a Loan to Pay off an Existing Loan – Is It a Good Idea?
It may not be a good idea to take a loan to pay off your existing debts because all you are doing is postponing the repayment.
However, when you factor in the reduced interest rates, and the ability to close it off early, this option will make more financial sense in the long run.
No matter how prudent you are, there are always chances that one may go overboard and get stuck in a pile of debt.
