Can we take out a personal loan to repay our debts?Can you take out a personal loan to repay your debts?
The personal loan is the easiest credit to obtain because no proof of allocation of the amount is required. Indeed, unlike a car loan or a work loan, the personal loan is an unaffected consumer loan. It allows you to finance any expense, and even to repay debts.
Personal loan: accessible consumer credit
The major advantage of a personal loan is the fact that it can be used for any type of expense , as no reason will be requested when entering into the contract. It can thus make it possible to meet an unforeseen expense, but also to finance a wedding or a trip .
The personal loan: a response to debt among others
Because the personal loan is not assigned to any particular expense, it can therefore be concluded to repay debts. This consumer credit can be obtained quickly and the amount released will be used to reimburse energy bills , car repairs or a large fine. However, taking out a personal loan to repay debts will add to the already significant charges at the end of the month. Indeed, even if with this additional credit, all the obligations of the month are covered, a new monthly payment to be repaid is added and the borrower’s debt ratio increases accordingly. Beware of over-indebtedness!
Alternatives to repay your debts
In order not to resort to a personal loan to repay debts, it is possible to take out a consolidation loan . Indeed, this type of loan will bring together all the outstanding debts in order to make only one monthly payment . With advantageous interest rates, this will save interest on all outstanding debt. However, you should check with a financial institution because not all debts are eligible in this type of credit redemption .