A personal loan to consolidate debt makes sense when its rate is lower than the rate on the dues it replaces, after adding the processing fee. It replaces 2 or more payments with one fixed EMI and one end date, which helps you manage your debt without missed due dates.
Worked example: Karan in Hyderabad
Karan is 33 and works as a salaried operations manager in Hyderabad. He earns Rs. 95,000 a month and has a CIBIL score of 720. He wants to manage your debt by clearing his Rs. 1.2 lakh card balance and Rs. 80,000 app loan, while keeping his car loan. He receives a Bajaj Finance offer of Rs. 2 lakh at an illustrative 14% per annum.
EMI = P × R × (1 + R)^N ÷ [(1 + R)^N − 1]. P is the loan amount in rupees, R is the annual rate divided by 12 and by 100, and N is the tenure in months. The formula spreads the principal and interest into equal monthly payments, so early EMIs carry more interest and later ones more principal. All figures are rounded to the nearest rupee.
| Tenure | Monthly EMI (Rs.) | Total interest (Rs.) | EMI as share of salary (%) |
|---|
| 24 months (2 years) | 9,603 | 30,462 | 10.1 |
| 36 months (3 years) | 6,836 | 46,079 | 7.2 |
Last updated: 15th October, 2026
The 36-month option lowers the EMI by Rs. 2,767 but adds Rs. 15,617 in interest, which is the trade-off in any plan to manage your debt. The processing fee on Rs. 2 lakh is up to Rs. 8,260. Karan picks 24 months (2 years), because 14% is well below the 36% on his card, and he closes the card once it is cleared. That one step helps him manage your debt for the next 2 years.
What can delay approval: a CIBIL score below 650 or existing EMIs that take up a large share of your income. Names or addresses that do not match across documents, and more than one loan application in the same month, can also slow it down.
