FAQs on Personal Loans for Debt Consolidation

FAQs on Personal Loans for Debt Consolidation
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The journey of higher education abroad is an exciting prospect for many Indian students. However, managing finances while pursuing education can be challenging. Multiple loans and credit card bills may hamper your personal finances. Debt consolidation through personal loans is a suitable option for students looking to streamline their financial obligations. Let’s discuss some of the most common FAQs on Personal Loans for Debt Consolidation.

What is debt consolidation, and how does it work for students studying abroad?

Personal loan for Debt consolidation refers to combining multiple debts or loans, bills etc into a single loan. For students abroad, this could mean merging various high-interest loans into one manageable personal loan. If you are facing financial difficulties in paying your EMIs, credit card bills or any other debt, then a personal loan for debt consolidation is an effective solution to manage the debts by paying a single EMI. 

Why would an Indian student studying abroad consider debt consolidation?

Debt consolidation simplifies the repayment process by providing a single monthly payment with a potentially lower interest rate. This makes it easier for students to manage their finances effectively. Multiple bills and EMIs can put you under financial stress which can ultimately lead to a lack of concentration in studies. Hence, to avoid such conditions, debt consolidation is a better option. 

Also Read: Planning to consolidate your debts? Check all the pros and cons of personal loans for debt consolidation

Can international students apply for personal loans in India for debt consolidation?

Yes, many Indian banks and financial institutions offer personal loans to Indian students studying abroad for debt consolidation purposes. Banks like IDFC First Bank, IndusInd Bank, HDFC Bank etc offer personal loans for debt consolidation at affordable interest rates. You can apply for the loan through online mode and it will be approved quickly subject to the verification process.

What are the eligibility criteria for obtaining a personal loan for debt consolidation as an international student?

Some of the basic eligibility criteria for a personal loan are mentioned below:

  • You must be an Indian citizen above 18 years of age
  • The credit score must be good i.e. above 700
  • There must be a co-applicant or guarantor
  • The applicant must be employed 
  • A valid student visa is required in case you are studying abroad.

How does the interest rate on personal loans for debt consolidation compare to other types of loans?

Interest rates for personal loans can vary, but they are generally lower than those for credit cards or certain types of education loans. Different banks offer different interest rates to the borrowers which can range from 9.5% to 21% or more. The interest rate also depends on the income and the loan amount. 

Can the loan tenure be adjusted based on the student’s financial situation?

Yes, many lenders offer flexible repayment terms, allowing students to choose a tenure that suits their financial capabilities. However, it is better to choose a suitable repayment term at the time of applying for the loan. In the later stage, if you want to increase or decrease the repayment period, you will be required to apply for a loan restructure. 

What are the documents required for international students applying for a personal loan in India?

Some of the basic documents required to take a personal loan for debt consolidation are as follows:

  • KYC Documents such as UID cards, driver’s licenses, Voter ID cards etc. 
  • Income proof
  • Last 6 months’ bank statement 
  • Last 3 months’ salary slip
  • Copy of Passport
  • Copy of student visa
  • Documents of co-applicant or guarantor

What expenses are covered in a debt consolidation Loan?

Yes, personal loans can be used to consolidate various debts like education loans, credit card debt, and other outstanding bills. One of the most important benefits of a personal loan is that it will be credited directly to your savings account allowing the flexibility to use the money as per your requirement. Hence, you can pay for any kind of expenses with a personal loan.

Is collateral required for obtaining a personal loan for debt consolidation as an international student?

Most personal loans are unsecured, meaning they do not require collateral. However, the amount of the loan will be very limited as it is decided based on your income. If you want a higher amount you can take a gold loan where you will be able to get an amount based upon the value of gold which you are mortgaging. 

How does the repayment process work for personal loans for debt consolidation?

Repayment is typically done through monthly instalments, and the amount is deducted automatically from the student’s account. You need to provide standing instructions for ACH (Automated Clearing House) to the bank account from which you want to make EMI payments. Make sure that the account is funded with the required amount always in advance.

Also Read: HDFC Bank is one of the most preferred choices for personal loans for education abroad. Read all about HDFC Bank Personal Loan for Education

Can a student apply for a personal loan for debt consolidation while still pursuing education abroad?

Yes, some lenders allow students to apply for a personal loan while still studying, provided they meet the eligibility criteria. If you are not employed, you can contact the bank to take the loan based on the income of the co-applicant. 

Are there any tax benefits associated with personal loans for debt consolidation?

Unlike education loans, personal loans for debt consolidation do not offer tax benefits on the interest paid. You can not claim tax deductions under any section of the income tax for a personal loan. 

What should students consider before applying for a personal loan for debt consolidation?

Before applying, students should assess their financial situation, compare interest rates, understand repayment terms, and ensure they meet the eligibility criteria of the lender.

Also, please remember that while consolidating loans and credit card bills is an effective way to manage finances it can also hamper your spending habits. After paying the credit card bill, it may come to your mind that now you have a higher available limit and you can spend a lot. Avoid using credit cards for expenses which are not essential and control your spending. 

Personal loans for debt consolidation can be a valuable financial strategy for Indian students studying abroad. By understanding the process and making informed decisions, students can streamline their finances and focus on their academic pursuits without the burden of multiple debts.

To know more about the loan application process, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience. ;

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About Shekhar Suman

Shekhar is a versatile writer with a passion for sharing knowledge and creativity. With expertise in crafting informative blogs on study abroad and finance, Shekhar helps readers navigate the complexities of education and financial planning. Most of his writings blend the practicality of finance and the beauty of language, making a meaningful impact in both spheres. Beyond his professional pursuits, he finds solace in the writing Shayari.

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