Should you take a personal loan to pay off your credit card debts? This is a very frequently asked question by a lot of individuals. The main motive behind this question is to ask can you take another loan to pay the initial loan. The answer to this question is yes. You can choose another unsecured loan to meet the initial, unsecured loan. Fast loan Singapore is a part of the debt consolidation plan.
Let’s study this in detail.
WHAT ARE SECURED LOANS
A lot of individuals get confused between a secured loan and an unsecured loan. A secured loan is a loan under which an individual must keep his property papers on asset papers with the bank. Let’s take this concept a little more clear. Assume you are an individual who is seeking to get a loan to buy a house. To provide this loan, the financial institution will go through various processes and procedures—you half to be eligible to meet the policy’s criteria.
Once you meet the criteria of the policy, the next step is to make the loan secure. How can a loan get secure? The financial institution is providing you with a considerable amount. What if you fail to pay back the amount to them. To secure these transaction financial institutions ask you to lend them any property paper or an asset paper. As a loan seeker, you are required to keep any of your property papers or asset papers with the bank. These are the main criteria you have to fulfill to get a loan.
The second step is to get the papers back. You can get your documents back only after making the complete payment. That is when you ultimately pay back the loan amount to the institution you can claim to receive your papers back. Just in case if you fail to make the payment, you will lose out on your papers. That is, if you do not make the payments regularly and fail to meet the deadline of the maturity, the bank will confiscate your papers. The banks have the complete right over your property if you fail to meet the criteria. They have the absolute right because you have them the right to do so at the initial stage.
WHAT ARE UNSECURED LOANS
Unsecured loans are opposite to secured loans. Under secured loans, the financial institution asks you to keep your property or asset papers with them until you clear the loan. The bank has the complete right to confiscate your papers in case if you fail to make the. But unsecured loans are the opposite of secured loans. Under this, you are not required to submit any sort of property papers for asset papers to the financial institution.
The financial institutions do not ask you to submit any kind of financial paper to secure the loan. This is the main advantage of unsecured loans. But this doesn’t mean you are free from the criteria. Instead of property papers, they ask you to fulfill the criteria as in other terms. Unsecured loans have various criteria and terms to fulfill. You cannot escape from the lengthy procedures of the loan in any institution. If you fail to make the payment, you have to face the consequences either way.
WHAT IS A PERSONAL LOAN
A personal loan is an unsecured loan given by the financial institution to the loan seekers. Personal loans are taken for personal reasons. You can take a personal loan for any personal benefit. It is completely up to you how you make use of the personal loan amount. A lot of individuals use a personal loan to consolidate their debts. This is the biggest advantage of personal loans.
If you have several unsecured loans like credit card loans for shopping loans, you can easily consolidate them. Many individuals find it very difficult to carry the burden of various and secured loans on their heads. Carrying this burden for a longer period can lead to anxiety and depression. As a smart individual, you can opt for debt consolidation plans. To consolidate your unsecured loans, you can easily take a personal loan. The main reason a lot of people take a personal loan is to consolidate their unsecured loans.
IS IT A GOOD IDEA TO TAKE PERSONAL LOAN TO CLEAR DEBTS
Many people ask it a good idea to take a personal loan to clear unsecured debts. The answer to this question depends on your financial capabilities and the loan amount. If you have n number of unsecured loans pending on your head, you can opt for debt consolidation. This is because dealing with different kinds of interest rates and different payment methods can lead to confusion.
To reduce the stress and confusion of various and secured loans, you can consolidate them together into a single loan. This can either be done through debt consolidation plans or personal loans. There are other debt consolidation private money lenders present in the region to lend you money. But it’s always better to take loans from reputed financial institutions than depending on money lenders.
BENEFITS OF DEBT CONSOLIDATION
- The main advantage of debt consolidation is you can reduce your burden of various debts.
- Your unsecured debts are clubbed together into a single that with the help of a debt consolidation plan.
- Your burden to pay the various interest rate of various unsecured loans reduces
- Your burden to make various payment to different financial institutions of the unsecured loans decreases
- You get more financial stability power in your hand when you consolidate your debts.
CONS OF DEBT CONSOLIDATION
- It is often found that people end up paying more money on interest due to death consolidation.
- Debt consolidates usually last for 5 to 7 years. In this period you pay more money on interest.
- The tenure of debt consolidation plans is usually long and stressful.
- You might end up paying more interest amounts on debt consolidation plan then your unsecured loans.