A Debt Consolidation Loan can be defined as a comprehensive financial solution taken by individuals to close out multiple liabilities and repay only one payment. Existing Liabilities are consolidated into a single funded facility which is more favorable for the individual. Majority of customers use it as a means to counter their financial difficulties and release the strain of debt/multiple debts on themselves.
The major benefits of a debt consolidate include but aren’t limited to the following;
- reduced.manageable monthly payments
- More income in hand, therefore enhanced savings
- Reduction in interest servicing
Major financial institution across the UAE have started to offer debt consolidation loans to individuals. At times these loans are priced at a slightly higher interest rate owing to the risk involved. These loans offer customers the options to have their existing financial obligations with multiple banks bought out and consolidated into a single finance. Lenders are aware when underwriting such cases, they may encounter some adverse repayment history. This is an inherent risk that the bank takes. For customers it offer them more breathing space as a means to plan out their finances better for the foreseeable future and also the chance to improve their credit score/rating.
It is always advisable to individuals who are servicing 5 or more payments to consolidate their liabilities before they spiral out of control. Prevention is always better than cure.