There are different loan products available in the market and an individual can avail more than one loan product to meet their needs. For example, you can take a home loan to buy a home and at the same time get a car loan to buy a car.
There are other kinds of loans too; like credit card bills, personal loans, business loans, etc.
There is an option to get a loan to repay the same kind of loan. Like, if the personal loan from a particular bank is running high interest, you can get a personal loan from another lender and pay it off.
You can use one loan type to pay off another loan type too. For example, if you feel that your credit card bill is mounting up and you are paying too much interest on it, you can get a personal loan and pay it off. Similarly, if you are shelling out too much interest on your personal loan, you can get a home loan top up and pay it off. Similarly, many people get personal loans to pay off other loans.
Some of the loans you can get to pay off other loans are:
You can use one of the above loans to pay off your high expense loans. However, there are some kind of loans that cannot be used for any other purposes; like –
You cannot get a home loan to pay off another home loan. Or, you cannot get a car loan to pay off your existing car loan. Using the above loans for purposes other than the intended purpose violates the loan agreement.
If you are servicing a high expense loan, you can opt for debt consolidation or loan restructuring with the lender. You may also opt for a balance transfer to another bank which will get you lower interest rates and extended tenure.