Using a pre-approved Personal Loan to manage Credit Card debt

India’s economy has undergone a significant transformation over the years. This has also led to a change in consumption patterns and the way customers view credit. According to data, India’s credit economy is witnessing a significant increase, with approximately 22 million people applying for credit opportunities every month. While credit can provide remarkable assistance in asset creation, it is also easy to become overextended and enter a cycle of debt. Here is a guide to manage your Loans:

1. Start paying off debt

The key to getting out of debt is prioritising. Prioritise Loans based on their interest rate, ranging from highest to lowest, repayment tenure, EMIs, and other relevant factors, and stick to this approach religiously. Paying off high-interest Loans first helps reduce the interest payable, thus indirectly reducing the Loan burden. A Pre-Approved Personal Loan enables you to clear the most expensive debt, and then move on to the next item in your list. This is known as the debt avalanche. While tackling the most expensive Loans first, ensure that you do not miss out on EMIs of other Loans.

2. Low interest rates

Are you repaying more than one Loan at the same time? What if I told you that opting for another Loan can help you avail of a lower interest rate and manage repayments more efficiently? Consider opting for a Personal Loan for debt consolidation, which consolidates multiple Loans into a single Loan at a much lower interest rate. The cherry on the cake is that you will be required to track one Loan instead of multiple Loans simultaneously.

3. Flexible repayment terms

You can apply for a Personal Loan for any legitimate reason, and it is very useful for meeting immediate personal expenses, such as a medical emergency, a sudden loss of a job, or any other unplanned event. Lenders offer flexible repayment tenures between 12 and 60 months. You can select a repayment plan according to your budget.

4. Convert EMIs into instalments

Credit Cards are a boon, but can burn a hole in your pocket if you do not use them prudently. They are an expensive form of debt and can generate huge outstanding balances. In case you are unable to pay your Credit Card dues, Credit Card companies offer you the option of converting your bill dues into EMIs. This helps break down your Loan into smaller, manageable payments, allowing you to reap the benefits of lower interest payable compared to late payments. You may also apply for a pre-approved Loan to clear these dues.

Conclusion

Stay committed towards your goal of making payments on time. Automate payments, if required. This will not only help reduce the debt payable but also help reduce interest payable, late payment penalties, and other related expenses. Also, always make sure that you pay the full EMI amount or the total outstanding amount on your monthly Credit Card bill. Paying the minimum amount due should only be exercised when you have no other option, as interest starts to accumulate on the remaining amount. This is especially true for Credit Cards.