Debt Consolidation Loan Charges: What You Pay and When

Debt Consolidation Loan Charges: What You Pay and When

A debt consolidation loan carries charges at 4 points: when old debts close, at disbursal, during repayment and if you close early. Add them up before you decide, as they reduce the interest you save.
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In summary

Charges on debt consolidation come from 2 sides: your old lenders, who may charge to close their loans, and the new lender, whose charges appear in the Key Fact Statement before you sign. Add both before you decide. In the example on this page, Rs. 38,806 of interest saved fell to Rs. 23,694 once every charge was counted, which still made the debt consolidation worth doing.


  • Old lenders may charge foreclosure fees.
  • The processing fee comes off at disbursal.
  • Bounce and penal charges apply only if an instalment is missed.
  • Count every charge before debt consolidation.

Weighing up a consolidation loan? Check your loan offer with your phone number and a one-time password (OTP) → apply online → receive funds within 24 hours* of approval.

When does each charge apply?

Charges land at different stages, and some of them come from lenders other than the one you are borrowing from. That is why a quote for the new loan alone never shows the full cost of debt consolidation. The table sets out each charge in the order it applies.


When it appliesChargeWhere you see it
Closing old debtsForeclosure charge set by each old lenderTheir payoff letter
At disbursalProcessing fee of up to 4.13% of the loan amount, inclusive of applicable taxesKey Fact Statement
During repayment, if an instalment bouncesBounce charge of Rs. 700 to Rs. 1,200, and a penal charge of up to 36% per annum on the overdue instalmentKey Fact Statement
Paying part early (Term Loan)Up to 4.72% of the principal prepaidLoan agreement
Closing the loan early (Term Loan)Up to 4.72% of the outstanding principalLoan agreement

Last updated: 26th October, 2026


The first row is the one people miss. Your old lenders set their own closing charges, and these appear only in their payoff letters, not in the new lender's documents. Ask each old lender for a payoff letter before you apply for debt consolidation, so you know the full amount you will need on the day you close.

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Which charges can you avoid?

Not every charge in debt consolidation is fixed. Some depend only on how you run the new loan:

  • Bounce and penal charges: These arise only when an equated monthly instalment (EMI) is missed, so an auto-debit set 1 to 3 days after payday removes the risk almost entirely.
  • Part-prepayment and foreclosure charges: These arise only if you repay early, so pick a tenure you can carry to the end rather than one you plan to cut short.
  • Old lenders' closing charges: Some loans stop charging for foreclosure after a set number of EMIs, so check whether waiting 2 to 3 weeks would remove the charge.

The processing fee is the one charge you cannot avoid once you take the loan. Treat it as part of the cost when you compare debt consolidation with doing nothing.

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What do the old debts cost today?

Take a borrower with 2 debts: a credit card balance and an older personal loan at a higher rate. Before thinking about debt consolidation, work out what clearing both would cost on their own. The table assumes both are paid off in 24 months at illustrative rates.


DebtBalance (Rs.)Illustrative rate (% per annum)Monthly payment to clear in 24 months (Rs.)Interest over 24 months (Rs.)
Credit card balance1,10,000366,49545,885
Old personal loan1,30,000206,61628,795
Total2,40,000 13,11174,680

Last updated: 26th October, 2026


The card balance is smaller than the loan, yet it costs Rs. 17,090 more in interest, because card rates run far higher. A combined monthly payment of Rs. 13,111 is also what a new loan has to beat.


Kavya's numbers

Kavya, 30, is the borrower behind those figures. She coordinates grape export logistics in Nashik on a salaried basis, with pay of Rs. 58,000 monthly and a 742 CIBIL score. To fund debt consolidation, she took Rs. 2.4 lakh, priced for this example at 13.75% per annum, and put 2 tenures for the new EMI side by side.


EMI = P × R × (1 + R)^N ÷ [(1 + R)^N − 1]. Here P = Rs. 2,40,000, R = 13.75 ÷ 1,200 and N = months.


TenureMonthly EMI (Rs.)Total interest (Rs.)EMI as share of salary (%)
24 months (2 years)11,49535,87419.8
36 months (3 years)8,17454,24714.1

Last updated: 26th October, 2026


Over 24 months, her new EMI of Rs. 11,495 is Rs. 1,616 below the Rs. 13,111 she paid on the 2 debts. The 36-month option would add Rs. 18,373 of interest, so she chose 24 months.


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.


Planning debt consolidation? With a Bajaj Finance Personal Loan, you can borrow Rs. 40,000 to Rs. 75 lakh, subject to eligibility. Check your loan offer with your phone number and a one-time password (OTP) → apply online → receive funds within 24 hours* of approval.

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Who can take a loan to combine debts?

For debt consolidation with a Bajaj Finance Personal Loan, you need to meet the criteria listed below:


CriterionRequirement
NationalityIndian
Age21 years to 80 years.
Employed withPublic, private, or multinational companies (MNCs).
CIBIL Score650 or higher.
Customer profileSelf-employed or Salaried

*You should be 80 years or younger, at the end of the loan tenure.

Last updated: 26th October, 2026


Meeting these criteria does not guarantee approval, which depends on eligibility, verification and credit assessment. No collateral or guarantor is required.


You may need the following documents, subject to your profile and application:


Document categoryAccepted options
KYC proofAadhaar/ passport/ voter’s ID/ driving license/ Letter of National Population Register/ NREGA job card
Identity proofPAN card, Real-time image / photograph
Employment proofEmployee ID card, Letter of Allotment of Accommodation Issued by Employer
Income proofSalary slips — last 3 months, Bank account statements — last 3 months
OthersPension order, Utility bill, Phone bill, Piped gas bill, Property / Municipal tax receipt

Not every applicant needs every document. Confirm the final list of required personal loan documents during your application.

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How much saving is left after the charges?

The real gain is the interest saved minus every charge, from both sides. The table works it out for Kavya's debt consolidation over the same 24 months, with the processing fee at its upper limit so the result is not flattered.


ItemAmount (Rs.)
Interest on the old debts over 24 months74,680
Interest on the new loan over 24 months35,874
Interest saved38,806
Less: foreclosure charge on the old loan (4%, as quoted)5,200
Less: processing fee on the new loan, at the upper limit9,912
Saving left after charges23,694

Last updated: 26th October, 2026


Even after Rs. 15,112 of charges, Rs. 23,694 is left, so the switch pays. The result would look different with a longer tenure: stretching the new loan to 36 months adds Rs. 18,373 of interest and wipes out most of the gain. Compare debt consolidation over the same period you would have taken to clear the old debts.

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What if the charges outweigh the saving?

Sometimes debt consolidation does not pay, and the numbers will show it. In these cases another route works better:

  • One costly card balance, the rest cheap: Clear the card first from savings or a bonus, as removing the costliest debt delivers most of the saving with no new charges.
  • An old loan close to its end: Let it run, since most of its interest has already been paid and moving it into debt consolidation saves little.
  • High foreclosure charges on old loans: Check the old loan agreement for a date after which the charge falls away, and plan the switch for then.
  • A new loan only at a longer tenure: Ask whether the lower EMI is worth the extra interest, or whether a higher EMI over a shorter tenure is possible.

Run the numbers for each debt on its own, not only for the total. One debt may be worth moving into debt consolidation while another is better left alone.

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How do you close each old debt cleanly?

Closing debts properly matters as much as the new debt consolidation loan. A small balance left behind, or an account still shown as open, can follow you for years. Follow these steps for each debt:

  • Ask for a payoff letter valid on a set date: It shows the exact amount, including interest up to that day and any closing charge.
  • Pay the exact amount on that date: Paying a day late adds interest and can leave a small balance that turns overdue.
  • Get a no-dues certificate: Keep it as proof that the debt is closed in full.
  • Check your credit report after 1 or 2 cycles: Confirm that each account shows as closed, and raise a dispute if it does not.

Do not cancel a credit card in a rush. Clearing the balance and keeping the card open, with low use, can help your credit utilisation after debt consolidation.

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How do you apply to combine your debts?

You apply for a Bajaj Finance Personal Loan online in five steps:

  • Check loan eligibility: Enter the required loan amount and repayment period, then click "CHECK LOAN OFFER".
  • Enter personal details: Enter personal, financial and employment details to receive a personalised offer.
  • Loan offer: Review the offer details and adjust the amount or tenure to suit the applicant's needs.
  • KYC verification: Complete KYC and verify bank details.
  • Talk to loan specialist: The application is submitted and an executive contacts the applicant about the next steps.

The process may differ for new and existing customers, and some customers may need to provide additional documents. Keep each payoff letter ready, so the old debts close in the same week the money arrives.

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Key offerings: 3 loan types

  • Flexi Hybrid Loan
  • Flexi Dropline Loan
  • Term Loan

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    You can pay interest-only EMIs for up to 36 months, after which, the EMI will consist of both, the principal and the interest. EMI is applicable only on the withdrawn amount.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest on the loan amount you withdraw.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Amount disbursed in one go
    The entire loan amount is disbursed at the start.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest.

  • Flexi facility charges
    No Flexi facility charges.

Personal loan interest rate and applicable charges

Type of fee

Applicable charges

Rate of interest per annum

10% to 30.5% p.a.

Processing fees

Up to 4.13% of the loan amount (inclusive of applicable taxes).

Flexi Facility Charge

Term Loan – Not applicable

Flexi Loans –Up To Rs 1,999 To Up To Rs 18,999/- (Inclusive Of Applicable Taxes)

Will be deducted upfront from loan amount.

Bounce charges

Rs. 700 to Rs. 1,200/- per bounce

“Bounce charges” shall mean charges for (i) dishonor of any payment instrument; or (ii) non-payment of instalment (s) on their respective due dates due to dishonor of payment mandate or non-registration of the payment mandate or any other reason.

Part-prepayment charges

Full Pre-payment:

  • Term Loan: Up to 4.72% (Inclusive of applicable taxes) on the outstanding loan amount as on the date of full pre-payment

  • Flexi Term (Dropline) Loan: Up to 4.72% (Inclusive of applicable taxes) on the outstanding loan amount, as on the date of full prepayment.

  • Flexi Hybrid Term Loan: Up to 4.72% (Inclusive of applicable taxes) on the outstanding loan amount, as on the date of full prepayment.

Part Pre-payment

  • Up to 4.72% (Inclusive of applicable taxes) of the principal amount of Loan prepaid on the date of such part Pre-Payment.

  • Not Applicable for Flexi Term (Dropline) Loan and Flexi Hybrid Term Loan.

Penal charge

Delay in payment of instalment(s) shall attract Penal Charge at the rate of up to 36% per annum per instalment from the respective due date until the date of receipt of the full instalment(s) amount.

Stamp duty (as per respective state)

Payable as per state laws and deducted upfront from loan amount.

Annual maintenance charges

Term Loan: Not applicable

Flexi Term (Dropline) Loan:

Up to 0.295% (Inclusive of applicable taxes) of the Dropline limit (as per the repayment schedule) on the date of levy of such charges.


Flexi Hybrid Term Loan:

Up to 0.472% (Inclusive Of Applicable Taxes) Of The Dropline Limit During Initial Tenure. Up to 0.295% (Inclusive Of Applicable Taxes) Of Dropline Limit During Subsequent Tenure

Credit guarantee scheme feeUp to 1.18% p.a. (pro-rated daily till 31st March) (inclusive of all applicable taxes) of the loan amount
Credit guarantee scheme renewal feeUp to 1.18% p.a. (inclusive of all applicable taxes) on the outstanding loan amount as on April 01 of the subsequent Financial Year.
*Renewal Fee to be collected only for 3 subsequent financial years.
 
**If the Remaining Tenure is less than 12 months, the CG Fee in subsequent years shall be charged prorated.

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Frequently asked questions

The charges

Making it worth it

What charges apply to a debt consolidation loan?

On a personal loan, the processing fee is deducted at disbursal. Bounce and penal charges apply only if an EMI is missed, and part-prepayment or foreclosure charges apply if you repay a Term Loan early. Your old lenders may also charge to close their loans, so ask each one for a payoff letter before debt consolidation.

It is not collected separately. The fee comes out of the loan when it is paid out, so your account receives the loan minus the fee. Plan for this when you work out how much to borrow, so that the amount credited is enough to clear every debt you plan to close. Your Key Fact Statement shows the exact fee for debt consolidation.

Add up the interest left on your old debts over the new tenure, and subtract the interest on the new loan. Then subtract the old lenders' closing charges and the processing fee. If something meaningful is left, debt consolidation saves money. In Kavya's case, Rs. 23,694 was left after every charge over 24 months.

Yes. On a Term Loan, a part-prepayment charge of up to 4.72% of the principal prepaid applies, and foreclosure carries its own charge, as set out in your loan agreement. Weigh that charge against the interest a lump sum would remove from the remaining principal after debt consolidation. If the saving is larger, prepay; if not, keep paying the EMI.

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