🔑 Key Features
| Feature | Description |
|---|---|
| Purpose | To pay off and combine multiple debts into one loan |
| Loan Type | Usually an unsecured personal loan |
| Loan Amount | Based on your total outstanding debt and eligibility |
| Interest Rate | Typically lower than credit cards and payday loans (10%–18% p.a.) |
| Tenure | 1 to 7 years |
| EMI | Single fixed monthly payment |
| Collateral | Not required (for unsecured loans) |
✅ Benefits of Debt Consolidation
| Advantage | Why It Helps |
|---|---|
| 💰 Lower interest rates | You pay less over time vs. high-interest debts like credit cards |
| 🧾 Single EMI | Easier to manage than multiple payments |
| 🧮 Fixed repayment schedule | Predictable and structured repayment |
| 📈 Improves credit score | Helps you avoid missed payments and high credit utilization |
| 🛡️ Less financial stress | Simpler tracking and reduced risk of default |
Apply Loan
🧾 Documents Required
Aadhaar & PAN
Bank statements (6–12 months)
Salary slips or ITRs
Loan statements of existing debts
Credit report (optional but recommended)
⚠️ Risks & Things to Consider
| Concern | Details |
|---|---|
| 📉 May extend loan tenure | You could end up paying more interest if you opt for a longer term |
| 💳 Can lead to more debt | If you keep using old credit cards after consolidation |
| 📋 Eligibility matters | Credit score, income, and history affect your approval |
| 💸 Processing charges | Some lenders charge 1–2% processing fees |
🧾 Common Debts That Can Be Consolidated
💳 Credit card balances
🧾 Personal loans
📅 Payday loans
🚘 Car or two-wheeler loans
🧍 Loans from multiple banks or NBFCs
🏠 Overdue utility bills or EMI backlogs
💡 Example
You have:
Credit card debt: ₹1,00,000 at 36% p.a.
Personal loan: ₹50,000 at 18% p.a.
Monthly burden: ~₹6,000+
✅ You take a debt consolidation loan of ₹1.5L at 12% for 2 years
EMI: ~₹7,000/month
Total interest saved: ₹30,000+ over 2 years
Only 1 EMI to manage
🔍 Who Should Consider a Debt Consolidation Loan?
People juggling multiple EMI payments
Credit card users stuck in revolving debt
Salaried professionals with stable income
Individuals with a decent credit score (650+)