When you find yourself in too much debt, it’s time to consolidate your loan and reduce the high-interest rates you have been paying. Consolidating your debt can be the best thing to do in such a situation. This can simplify your payments and reduce debt.
Here are the 5 things you can do to start consolidating your debt
Check your credit history
Bad credit history or score will get your high-interest rates. It will not disqualify you but you will end up paying more. If you have good interest rates, you will get a low-interest rate. Your new consolidated loan should have a low-interest rate. If you are not paying your dues on time, start making the payments before the due date or on the due date. Get into the habit of checking your credit score for any error. You can find free tools online for the same. If you have any small debts, please pay them off first and close them.
Make a list of your debt and payments:
Start making a list of your debts which you want to consolidate. This will include your credit cards, monthly payments or any other debts. Add the entire amount which you pay every month towards such expenses. The new loan will get you a low-interest rate which will further reduce your payments monthly.
Check your loan options
Most of the financial institutes like banks, online personal loan apps, credit unions, etc provide debt consolidation. Start comparing all the options and the interest rates provided by them. If you have a bad credit history, you might not get a good deal from the banks. If such a situation you opt for online personal loan apps. Apps like CASHe provide loan up to Rs. 2 lakhs. The documents required are minimal and the process is much shorter than the traditional bank loans. You can apply for an online short-term loan sitting at home or office. You will get to know the interest rate on the app itself, once you complete the application.
Apply for the loan
If you go ahead with the bank, you will have to submit several documents and the process might take a couple of days. If you go ahead with the loan apps, you can get approval on the same day of application. The first step to any loan application process to get your documents ready and read the terms and conditions carefully. If you meet the lenders' requirement, go ahead and submit the documents.
Make the payment once you have the loan
Once the application is done, the last step is to wait until you get the money and repay the debt. Make sure you first pay off all the debt before indulging in spending money on any personal reasons. The new loan will reduce your interest rate.
Once you are done with payments, you will realize that debt consolidation is a good option to manage your debt.