A property loan or loan against property is a versatile credit option that allows individuals to mitigate several financial requirements.
Individuals can access high-value loan amounts to consolidate debts and other obligations. It helps individuals clear their existing debt obligations like credit card bills or consumer debts without straining lifelong savings. Several lines of credit are likely to draw higher interest; opting for debt consolidation will help one repay all of them. Before availing a loan against property or debt consolidation loan, one must know the ins and outs of the credit option.
Features of a Debt Consolidation Loan
Besides knowing what is a LAP for debt consolidation, individuals must be aware of its features. First, it works as effective means to clear current loan liabilities and go debt-free faster.
Here are some features of a debt consolidation loan:
- Substantial loan amount
In a loan against property, individuals get a loan amount based on the prevailing market value of the property. Therefore, a loan against property is an ideal credit choice for consolidating debts as individuals can access high-value loan amount and use it to clear larger debts.
- Competitive interest rates
As borrowers pledge their assets to avail of the funds, lenders will likely disburse loan amounts at affordable interest rates. Competitive interest on loan against property will translate into a lower EMI amount and reduce the overall cost of borrowing. An affordable interest rate will keep the total payable amount within the limit.
- Flexible loan tenor
Individuals availing loan against property for debt consolidation can repay the loan amount over an extended repayment term. Therefore, it will help reduce the EMI burden, thereby enabling borrowers to repay loan principal on time and dodge defaulting on EMI pay-outs.
- Easy online application
With robust digitisation in financial sectors, one can easily avail of NBFC loan against property by following the simple steps:
Step 1: Visit the preferred lender’s official website and fill out the online application form with personal and property details.
Step 2: Mention income details to receive the best offer.
Step 3: Attach loan against property documents and submit the form.
On successful submission, a representative from the financial institution will contact and take the remaining application process ahead.
Furthermore, borrowers can opt for quick refinancing. It will also help them save a significant amount on the interest component. Even individuals can reap the advantage of flexi loans. They can borrow funds from the sanctioned amount and pay interest only on the withdrawn amount.
Mistakes to avoid while considering a debt consolidation loan
Individuals must be aware of the following mistakes to avoid falling into the debt trap:
- Not altering repayment strategy
If an individual has to avail of a debt consolidation loan, something must have been wrong with the previous repayment plans. Borrowers need to understand the main cause of the issue and alter the repayment strategy. They must take time to analyse the problem to avoid falling into future debt traps.
- Impulsive spending
Debt consolidation loan helps individuals clear off their existing dues, thereby freeing up a lot of money, and prompting individuals to engage in thoughtless spending. Individuals must be careful regarding their expenses, otherwise, they will fall again into a vicious debt cycle.
- Inadequate savings for emergencies
Piling dues can prompt one to use up his or her emergency funds. Therefore, it is important for individuals to save additional funds to avoid falling into a debt trap.
- Choosing long loan tenor
Individuals must choose the loan tenor wisely. Opting for an unnecessary long repayment term will increase the interest outgo. Individuals will have to pay a significant amount as interest which can lead them to fall into a debt trap.
Under the loan against property for debt consolidation, individuals can also reap the advantages of pre-approved offers. Leading financial institutions extend these exclusive offers on several financial products like loans against property, home loans, etc. These offers expedite the loan application process and help save turnaround time. Intending individuals can check the pre-approved offers by submitting their names and contact details.
To sum up, a debt consolidation loan is a customised offering under a loan against property. Individuals avail of this credit option to clear multiple small debts. Borrowers can clear their existing loans or short-term high-interest debts with a loan against property.
