Should I Pay Off Holiday Debts With a Personal Loan?

If your holiday spending really went off the rails this season, consolidating the debt with a loan could be beneficial. A personal loan is a loan that can be used to fulfill a wide variety of financial requirements. If a borrower wants to pay off credit card or other debt. Personal loans often come with much lower interest rates than credit cards. Also, there are now many online loan lenders that offer loans at the best rate and terms easily.

If you use multiple cards for holiday shopping, you can consolidate the balances into a single loan. And depending on your credit score, you may qualify for a personal loan amount that will cover your entire balance. A personal loan provides you with a fixed amount of money over a fixed time period and at a fixed interest rate. It’s rare to find 0% interest rates for personal loans, but rates are often lower than keeping a balance on your current credit cards.

Application Process for Personal Loans

• Loan Enquiry

Before applying for a loan you need to compare the terms and conditions of various lenders available in the market. Also, make sure to check with the loan eligibility criteria and calculate your loan EMIs based on the principal amount and interest rates charged on the loan.

• Submit The Application Form

After the submission of the application, the lender will process the document and approve the disbursement of the loan. To apply for a personal loan you have the option to apply for it online from the comfort of your home or opt for a traditional offline process of the loan application.

• Document Collection

When applying for a personal loan, the applicant is requested to submit a certain set of documents which may vary from lender to lender. The following are the documents required for a personal loan:

• Photo Identity proof

• Proof of Address

• Employment Proof

• Income Proof

• Passport size photographs

• Verification of Documents

The submitted documents go under a verification process. A representative from the field investigation team visits the borrower’s place of residence to verify whether the address mentioned in the documents are valid. Verification of other documents like PAN Card, Aadhaar card or Passport is done using online portals.

• Disbursal Of Loan Amount

Once all the documents are verified, the borrower needs to sign a loan agreement that contains all the information about the loan. Once the agreement has been signed by the borrower the loan amount is credited within 24 hours to the applicant’s bank account. After the disbursal of loan, the applicant is free to use the loan amount wherever and however he/she wants to.

Tips to Prevent Overspending

It’s never too early to start preparing for the next holiday spending. Make these moves now to prevent another debt in the future:

• Maintain a Budget

The easiest way to prevent overspending is to arm yourself with a proper budget. Start putting together a list of gifts you’ll need to buy this year, and how much you can comfortably spend on each person without burning a hole in your wallet.

• Start Saving Now

Saving as soon as possible will make things less stressful when you’re ready to start shopping. Consider automating your savings with an app. Some of these automated savings tools will round up your purchases to the nearest dollar and stash away that loose change into a separate account. If you need a bigger boost to your savings, consider automatically saving a percentage of each paycheck.

• Make Big Purchases Earlier to Make Manage Cost

Without having a plan, you will feel frantic while shopping just days before the holidays and, as a result, can end up spending much more than you had originally intended. You do not need a large amount of money on hand, you only need a fraction of the total you plan to spend.

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