Debt consolidation is nothing but combining all the debts into one. Basically, this is done when there are too many loans and a high amount of interest to be paid on multiple loans. Debt consolidation is an effective solution which involves nothing but a fresh loan in order to clear the old ones.
When there are too many loans from different banks, with different interest rates this obviously leads to payment of high interest every month. When all these are cleared by debt consolidation loan there would be only one loan with comparatively less interest and helps save a lot of money after paying the monthly regular payment.
Non-payment of the monthly credit card bills on time affects the Credit Score. A debt consolidation loan will help you keep your credit score high since your monthly bills would have been paid properly on time.
Debt consolidation is definitely a good idea for people who carry multiple Credit Cards and Personal Loans. Due to so many payments in line, one would neither be able to clear these monthly bills nor make any savings. It is for them, the consolidation loan works well. It is better to pay one particular less interest than paying different interest rates at different banks. Also, it helps you save time as there’s just one payment to be made now that all loans have been consolidated into one.
Eligibility: Every bank has its own eligibility criteria but here are a few points which are similar in all the banks
- Minimum salary Criteria (depends on the bank)
- The DBR i.e Debt to Burden Ratio (Must be acceptable by the bank)
- Salary transfer is required
- Company must be listed with the Bank
Documents required: Almost all the banks ask for the same documents like
- Valid Emirates ID(UAE Nationals)
- Salary Certificate/Salary Certificate Letter
- 3-5 months Bank statements
Note that some banks may ask for more documentation if required. Make sure you talk to an official from the bank to confirm the documents needed.