Over the years, as you bought a house and car, renovated your home and even borrowed money against your credit card, you ended up accruing debt in outstanding loans. Your income is stretched thin with monthly EMIs against these loans. Then you hit upon a bright idea: To square off all outstanding debt in one shot by taking a personal loan?
All the financial gurus in the world will advise against taking on fresh loans to repay old ones – they reason that it only sinks you deeper in the cycle of debt. But considering that you are taking a personal loan that you can easily repay in a short time, is a good idea to implement.
Will the personal loan be enough?
Are you unsure about how to take a personal loan to repay old debt? Follow these steps:
- Calculate the outstanding amount.
Draw up the latest statements on all your loans. These mention the outstanding amount on the date the statement was generated. Thereafter, cumulate the entire amount to calculate how much money you need to repay.
- Check how much loan you can get.
You now know what your outstanding payment amount is. Now check with an instant personal online loan app about your quick loan eligibility. Your eligibility determines how much loan amount you can get. If the eligibility amount is equal to or higher than your outstanding, then you should apply for the loan right away. If not, then you must consider another avenue to either
1) Raise the deficit money, or
2) Repay the outstanding without recourse to a personal loan. Please note that your eligibility might be lower because you have previous loans to your name.
- Make a repayment plan.
Before you apply for the personal loan, it helps to draw up a repayment plan. It will be repaid automatically every month via EMIs, but you can also repay earlier than the term. There are two ways to do this:
- Save a fixed sum of money every month. After six months, make a lump sum repayment to reduce the principal.
- Divert any cash gifts from relatives and or bonus/performance incentives from your job towards repayment.
- Apply for an instant personal loan online
Now all that remains is to apply for the personal loan and await approval. Once approved, the loan money is disbursed to your savings account in minutes. You can withdraw it to repay other loans
Taking a fresh loan to repay old loans is not as complex as it may first appear. It is indeed a good method to clear previous debt while diligently servicing a new one.