There are many reasons why you might consider taking one loan to repay all other smaller loans. If you have multiple loans, it may be helpful to take out a loan from an instant loan app like PaySense to repay the loan with the highest interest rate. This can help lower your monthly payment and simplify your loan repayment process. Once you clear your debts against all existing old loans, you can have a fresh start and bring discipline. 

Why People Take Several Loans

Poor financial planning and fixed budgets limit people, and in the time of a financial emergency, whether planned or unplanned, people end up taking loans from multiple sources. This is true of the unorganized sector of lending and borrowing. In the organized sector of banks, loan defaulters are generally brought to task, and there are collateral and guarantors to check. Also, credit scores matter, and banks do not lend out too much to the same person with an already existing loan against their name. Banks encourage people to clear their old debts or mortgage some assets before a new loan is approved. 

Loans for Those with No Assets and Credit Score

With the Fintech sector growing, loan eligibility has increased manifold for those working in the unorganized sector or blue-collared sector or those starting to work, and those without creditworthiness. Many online loan apps are bridging the gap of loan needs of the said sector with easy interface, eligibility, and possibilities, all within the industry’s rules. 

Should You Take Out a Loan to Repay Other Loans?

Because interest rates of personal loans are so arbitrary among lenders, many people do not spend enough time researching better options and comparing interest rates and the ease of applying for a loan that can repay all other loans. Many online loan apps in India, like PaySense, offer personal loans with undisputed end-use. If you contemplate consolidating all unsecured debt with one personal loan, why not! This means a lot of things. First, you have a chance to improve your creditworthiness by closing all debts. You have a shot at better focus and financial planning with single loan repayment in your budget. And the ease and convenience of applying for a loan from an online loan app with easier eligibility, less paperwork, and easy approval and disbursal processes. 

Conclusion

Taking out a loan to repay a loan is an idea that many people try and do not recommend because credit scores dip. However, it isn’t always the best option. However, suppose you are looking at consolidating all unsecured debt with one personal loan from an online loan app with the capacity and budget for repayment. In that case, it is better than keeping track of multiple loans with different due dates and interest rates.

Anil Sumra

Anil Sumra is a Digital Marketing Expert with more than 10 years of experience. He loves to write on various financial topics online to create financial awareness. He holds a bachelor’s degree in Finance & Management.

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