What is debt consolidation? An easy financial decode

Debt consolidation means replacing multiple existing debts with a single new loan. By understanding debt consolidation vs. personal loan options, you can choose the best personal loan to lower interest costs, manage a single EMI instead of many, and organise your monthly finances more efficiently.

You can also check if you already have a pre-approved offer in your city. The process is fully online: Check your offer with phone number and OTP → Apply online in 5 minutes → Get funds within a day*.

1. It lets you pay multiple debts with one affordable loan

Managing several debts can be stressful. Debt consolidation allows you to pay off credit card balances and other borrowings with just one personal loan, making repayments simpler and easier to track. Get funds in 24 hours and say goodbye to multiple EMIs.

2. It makes repayment easier

Debt consolidation doesn’t erase your debt; it reorganises it. After paying off your existing debts, you continue repaying the consolidation loan via EMIs over a defined period. This method helps you stay on track and eventually become completely debt-free.

3. Signing a debt agreement

A debt agreement is a formal contract between you and the lender. It ensures the loan is used solely to repay existing debts and that repayments are made on time. Any delay may result in penalties, so sticking to the schedule is key.

4. Avoid borrowing more during consolidation

While repaying a consolidation loan, you shouldn’t take on new loans. Borrowing more could push you back into a cycle of debt, undermining the benefits of consolidation.

5. Affordable repayment

Debt consolidation loans are often cheaper because of lower interest rates and flexible terms. Paying a single EMI is usually easier on your wallet than juggling multiple loans. Some options, like Flexi Loan facility, allow paying just the interest as EMIs, making it even simpler to clear debts.

Debt consolidation combines multiple outstanding debts into one manageable loan. Instead of paying many EMIs or credit card bills, you repay a single EMI on a fixed schedule.

A popular approach is using a personal loan at a lower interest rate to repay credit cards or small loans. This is why many look for the best personal loans for debt consolidation.

Other methods include:

• Balance transfer credit cards: Move existing card dues to a new card with a temporary low or zero interest rate. Be mindful, as charges may rise after the promotional period.
• Secured loans: Such as property-backed loans, suitable for larger debts.

Proper use of consolidation simplifies budgeting, reduces interest, and gives clear repayment planning.

In India, your choice depends on income, credit score, and existing debts. Popular options include:

1. Personal loans for debt consolidation
Unsecured, quick to access, and ideal for clearing credit card dues or small loans. Fixed EMIs make repayment predictable. Check your offer in just 2 steps and apply online to get our loan.

2. Balance transfer credit cards
Shift balances to a card with a promotional interest rate. Helpful short-term, but requires careful repayment after the offer ends.

3. Gold loans
Secured by jewellery, usually lower interest and fast disbursal. Good for short-term needs without selling assets.

4. Loan against property
Uses residential or commercial property as security. Lower interest rates and longer tenures make it suitable for high-value debts.

Personal loans are among the most popular tools for consolidation. Here’s how they typically work:

1. Apply online from a trusted NBFC or lender.
2. Loan is credited directly to your bank account.
3. Repay existing debts such as credit cards and EMIs.
4. Continue repayment via one structured EMI.

Example: If you owe Rs. 2,00,000 across multiple cards with high interest, consolidating with a personal loan at a lower rate can save significantly on interest while simplifying repayment tracking.

Anyone meeting the criteria below can apply online. With Bajaj Finserv Personal Loan, borrowers may receive approval for up to Rs. 55 lakh with quick processing and minimal paperwork.

Personal loan eligibility criteria

• Nationality: Indian
• Age: 21 years–80 years*
• Employment: Public, private, or MNC
• CIBIL Score: 650 or higher
• Customer profile: Self-employed or salaried

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

Documents required

• KYC: Aadhaar, passport, voter ID, driving license, NREGA card
• PAN card
• Employee ID
• Last 3 months’ salary slips and bank statements
• Utility bills, piped gas bill, pension order, or accommodation letter
• Property/municipal tax receipt
• Real-time photograph
• Ration card