Debt consolidation, explained for salaried borrowers
What it means to merge several EMIs into one loan, who it can help, and when it may not be worth it.
What is debt consolidation?
Debt consolidation means taking one new loan and using it to pay off several existing ones, such as personal loans, credit-card balances and app loans. You are then left with a single EMI and a single due date.
When it can help
It tends to make sense when your current debts carry higher interest rates than the new loan, for example credit-card balances or short-term app loans. It can also help if tracking many due dates is causing missed payments.
When it may not help
If the new loan has a similar rate, a much longer tenure, or high fees, you may end up paying more overall. Foreclosure charges on your existing loans also matter. Always compare the total cost, not just the monthly EMI.
We tell people straight when consolidating isn't worth it. Approval, rate and tenure are always decided by the lender.
This article is general information, not financial advice. Approval, rates and terms are decided by the lender.