A personal loan is flexible enough regarding the end-use of credit, unlike other credit lines. The borrower can use a personal loan for any legitimate purpose, from buying expensive products, or paying off medical bills, to funding a vacation and children’s higher education. Personal loan credit can also be used to repay other debts.
Close Other Debt Accounts Using Short-term Personal Loans
Following are the ways borrowers use short-term loans to clear their other debts bearing high-interest rates:
Credit Card Debts
The cost of using a credit card may result in huge debts if bills are not paid on time. Credit card interest rates on dues are very high most of the time. Compared with personal loan credit, personal loan interest rates are typically lower than credit card interest rates. Therefore, individuals avail of short-term loans with renowned lending institutions or NBFCs (Non-banking Financial Companies) offering competitive interest rates.
Planning for Prepayment
To close a loan bearing a high-interest rate, borrowers may apply for an affordable short-term personal loan. It helps them to prepay the existing loan and save on loan interest costs significantly. Reputed lenders, like NBFCs, require minimum personal loan documents and have a hassle-free process.
Consolidate Other Loan Accounts
An individual may have many loan accounts, like a vehicle loan, education loan, gold loan, etc. Borrowers need to pay timely EMIs (Equated Monthly Instalments) for each of their existing loans. Tracking multiple loans may lead to missing an EMI. Therefore, borrowers opt for a single personal loan to easily repay other loans. Having a single EMI every month is simpler to remember than various EMIs for different loans. The personal loan amount can be as high as Rs.25 lakhs with reputable NBFCs.
This way, borrowers use short-term loans with minimal eligibility criteria and documents. With handy personal loan documents, making an online application is a matter of a few minutes.
