• Consolidate Debts With Personal Loans

    Personal loans are loans that banks offer without securing any asset or property that you own. These loans are also called ‘únsecured loans’ and are most often taken to meet immediate or urgent financial needs that crop up from time to time. Like all other loans, personal loans bear a particular rate of interest that is mutually agreed between the two parties, the borrower as well as the lender. In the Philippines, interest rates for personal loans vary from one lender to another and are more often than not, quoted monthly.

    Personal loans are the easiest to request for or borrow because there isn’t much documentation involved and it is unlike the other kind of loans in the market where you use your house as security against the loan or admission related documents for an education loan.

    Personal loans are also the wisest options to jump into if you wish to consolidate all your other debts and pay just one.

    What is Debt Consolidation?

    Debt consolidation is the smartest way of repaying a debt. Consolidating debts is essentially, combining all existing debts to create one large loan with low rates of interest. Usually, the more you borrow, the lesser will be the borrowing cost. It makes so much sense if you have just one debt on your mind that needs to be cleared, rather than so many at the same time. It is much more easier to be in control of your debt that way. Therefore, you can take a personal loan to repay all other debts and repay just one loan, i.e. the personal loan.

    Many Filipinos borrow money for various reasons such as vacation & travel, medical expenses, weddings, renovating a house, tuition fee for children etc. even though they know paying off different debts is not quite easy. If you are one such Filipino, do consider consolidating all your debts to keep things smooth and simple for you. Check what the amount comes up to when you add up all your debts, and go for a personal loan to pay off the total amount so that you now have only one loan to take care of. This will ensure you incur lesser rates of interest to repay and even lesser follow-up issues for each of the loans.

    What you need to know before you consolidate your loan?

    There are a few things that we must keep in mind before you proceed to consolidate your loans.

    First, keep in mind that you will still be making a monthly payment; debts never really disappear if left unpaid. Even after consolidating the loan, one must change their financial habits unless you wish to spiral into further debt.

    As a part of the initial steps to consolidating your loan, try to understand the size of each loan, what is the monthly amount that is being paid and what is the outstanding duration left on each of the loans. Next, compare your debts with your monthly income. This helps you budget your expenses so as to satisfy your debts.

    Once you have all these details in place, and your income is more than the planned repayment amount, you can approach banks to get a personal loan for the same. You can compare the rates of interests and promotional offers from different banks on their personal loan products. Always keep in mind that this loan must be able to ease you off your debts and not add on to your financial burden.

    The last step to this process is keeping in mind that there is no complete assurance that you can lessen the amount that you are repaying through debt consolidation. One must always remember that debt consolidation is not a debt solution.

    Debt consolidation merely combines all your debt into one single, more manageable loan. If your current monthly repayments seems smaller in figure, check if it is due to a longer loan term, for which you may be paying higher interest rates.

    Tips to keep in mind before taking a personal loan to consolidate your debts:

    • Go for a personal loan in times of emergency. However, be sure that you will be able to pay back the loan on time.
    • Opting in for a personal loan is a great choice if it results in savings overall. The loan should help you gain possession of an asset, the value of which is going to appreciate over a period of time. This will help you generate an inflow of cash, to either help repay the loan or act as a long term savings.


    1. With a personal loan, you will be able to borrow more than you would with a credit card.
    2. Since the EMI of your personal loan will be a fixed amount every month, it is easier to budget than live with the uncertainty of the amount you will have to pay the next month.
    3. In most cases, the rate of interest on the personal loan is fixed as well.
    4. With a personal loan, you can choose the tenure over which you can repay the personal loan. The amount of interest you are charged is proportionate to the length of the tenure of the loan.


    1. The rate of interest are really high if you want to apply for a loan of a small amount.
    2. The more you borrow, lesser the rate of interest is going to be. This might tempt you to take a bigger loan than you need.
    3. Sometimes, you might have to incur an early repayment charge if you want to pre-close the loan or pay it off early.

    You must be wondering how taking a personal loan can actually be beneficial, in spite of the extremely high rates of interest. It definitely can be beneficial depending on the circumstances of the person taking the loan. It is definitely worth taking a personal loan to consolidate your debts and repay them all at one go. The personal loan will ensure you repay a fixed rate of interest over a tenor chosen by you. You will be paying one EMI every month and this will help plan your finances better.

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