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Use Short-Term Loan To Deal With Too Many Loan Accounts

IndianMoney.com Research Team | Updated On Monday, November 11,2019, 02:49 PM

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Use Short-Term Loan To Deal With Too Many Loan Accounts

 

 

Borrowers often have dreadful stories to narrate when it comes to loan repayment. Once in their lifetime, each borrower has two or more loans running simultaneously and such borrowers receive the worst hit. The Credit card charging huge interest amount on dues can add to their financial woes.

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Use Short-Term Loan To Deal With Too Many Loan Accounts

The question is, are there any strategies to settle multiple loans at once or to manage such scenarios without hurting the credit score? The answer is yes. Personal loan or short –term loans can help you manage such circumstances, however, availing loans should be your last option and you must try liquidating your savings to pay off your bills first. Listed below are certain scenarios when a short-term loan can prove beneficial for you.

Excessive Credit Card Debt:

Usually, credit card issuers charge a high-interest rate on credit card balance. The interest rate ranges from 24% to 36% per year on your credit limit. So when you have credit card bills prioritize repaying the dues on time to save finance charges. However, if you have incurred a huge debt on your credit card then you need to tackle it first without affecting the EMI payments of other loans. Credit card debts can quickly add up to a huge debt amount and thus you can opt for some convenient financial instruments to the outstanding amount on your credit card.

  1. Opt for Balance Transfer: Credit card balance transfer is the process through which one can reduce their existing credit card debt by transferring the outstanding debt to a different credit card account held with another credit card issuer. The minimum interest introductory offer will allow you to pay off your pending amount faster. Most credit card issuer’s charges zero percent interest for a limited period on credit card balance transfers. The introductory period differs from one lender to the other, so make sure to choose these options if the debt amount can be repaid within a year. This is because the normal interest rate is levied once the introductory period is over. So make sure you pay off the balance within the introductory period to avoid the additional burden of debt.
  2. Avail Top-Up on Home Loan: If you are in trouble dealing with the additional pressure of credit card debt along with a home loan, you may consider availing a top-up loan. While choosing to close the loan account, make sure to settle the loan that carries the highest interest rate. Since credit card debt carries high-interest charges, a top-up loan can help you clear your credit card debt at a low-interest rate. Usually, if you have been paying your home loan for quite some time then banks consider giving you top-up loans by evaluating the market value of the property. Also, the interest rates will be similar to your home loan rates.
  3. Try for Loan against Security: You may also consider using your assets to get a bank loan. If you possess assets like gold or property then consider pledging them as security to avail loan against security. Apart from a better interest rate, it will also ease the repayment process. If you have huge credit card debt then the entire outstanding amount can be repaid at a much lower interest rate than your credit card.

If the above-stated instruments are not working for you, then the best way to tackle such debts is to avail of a short-term personal loan with a cheaper interest rate. While opting for the short-term personal loans check the prepayment charges and the processing fees. Ensure you do not land yourself into more financial trouble after taking the loan.

See Also: Personal Loan in India

Too Many Loan Accounts:

If you are saddled with too many loans are struggling to settle them then you first need to sit down and access how the loans can be settled within minimum time. Professional help can prove to be beneficial while dealing with such situations.

Make a list of all the loans and evaluate whether you can consolidate this debt or not. You can make significant gains if the new loan’s interest is cheaper.

If you have multiple loans running at the same time then you must keep directing your payments towards each account with utmost dedication, However, if you want to settle all the loan accounts at once then you may consider prepaying the loans by liquidating your savings. You may also use a part of your bonus or proceeds from the sale of assets to bring down your high-interest debt as much as possible. 

A short term loan or a personal loan can also prove beneficial in tackling such financial situations. Most banks will also give you Loans against property and allow you to consolidate your debt. Check the charges and apply only if it reduces your total cash outflow.

See Also: Know All About Pre-Approved Personal Loans

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IndianMoney.com Research Team

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