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Debt Consolidation Loan in India

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ICICI BankICICI Bank
Processing Time3 - 5 Days
Interest Rate9.99% onwards
Processing FeesUpto 2.5%
Max. Loan Amount₹2 Crore
HDFC BankHDFC Bank
Processing Time3 - 5 Days
Interest Rate9.99% onwards
Processing Fees₹4999+GST
Max. Loan Amount₹50 Lakh
Axis BankAxis Bank
Processing Time3 - 5 Days
Interest Rate9.99% onwards
Processing FeesUpto 2%
Max. Loan Amount₹40 Lakh
Kotak BankKotak Bank
Processing Time3 - 5 Days
Interest Rate9.99% onwards
Processing Fees₹12999+GST
Max. Loan Amount₹50 Lakh
Bajaj FinservBajaj Finserv
Processing Time1 - 2 Days
Interest Rate10% onwards
Processing FeesUpto 1.2%
Max. Loan Amount₹75 Lakh
IDFC First BankIDFC First Bank
Processing Time1 - 2 Days
Interest Rate9.99% onwards
Processing FeesUpto 2%
Max. Loan Amount₹1 Crore
CholamandalamCholamandalam
Processing Time3 - 5 Days
Interest Rate17% onwards
Processing FeesUpto 4%
Max. Loan Amount₹50 Lakh

What is a Debt Consolidation Loan?

Debt consolidation refers to merging all high-interest loan EMIs and credit card dues into one manageable EMI, usually at a lower interest rate and longer tenure. The process involves paying off all high-interest loans using a new loan and then paying off the new loan in one simple EMI.

Debt Consolidation Loan Highlights

Feature Details
Loan Amount Up to Rs. 50 lakh
Interest Rate Starting from 9.98% p.a.*
Tenure Up to 5 years
Processing Fee Up to 4% of the loan amount
Disbursal As per the lender
Purpose To consolidate multiple debts

How Does Debt Consolidation Work?

To consolidate your debt, you can follow the steps mentioned below:

  • Calculate your current monthly obligation: Add up all remaining debts to understand how much you need to borrow.
  • Consider Prepayment/Foreclosure charges: Take into account the prepayment or foreclosure charges associated with closing each existing loan account
  • Apply for a loan: Compare and apply for a loan at Paisabazaar at a lower interest rate and longer tenure.
  • Pay off the old debts: Use the funds from the loan to pay off the high-interest debts.
  • Make one EMI payment monthly: Pay off the new loan in one simple payment every month.

For a better understanding of debt consolidation, let’s take a look at an example:

Before Debt Consolidation

Debt Type Outstanding Amount Interest Rate Remaining Tenure Monthly EMI
Personal Loan Rs. 2,00,000 14% p.a. 24 months Rs. 9,603
Two-Wheeler Loan Rs. 90,000 11% p.a. 36 months Rs. 2,946
Credit Cards Bill Rs 1,00,00 17% p.a. 12 Months Rs 9,120
Consumer Durable Loan Rs. 65,000 15% p.a. 24 months Rs. 3,152
Total Rs. 4,55,000 Rs. 24,821

After Debt Consolidation

Particular Value
Debt Consolidation Loan Amount Rs. 4,55,000
Interest Rate 11% p.a.
Loan Tenure 48 months
Monthly EMI Rs 10,338
Number of EMIs 1

Illustration: By consolidating all four debts into a single loan of Rs. 4.55 lakh at 11% p.a. for 48 months, the borrower replaces three separate EMIs totalling Rs. 24821 with a single EMI of approximately Rs. 10,338. While the monthly repayment becomes more manageable, the longer tenure may result in a higher total interest payout over the life of the loan.

Benefits of Personal Loan for Debt Consolidation

The benefits of personal loan for debt consolidation are mentioned below:

  • Better financial management: Reduces financial stress by merging multiple EMIs in one simple EMI. Helps in better financial management.
  • Lower EMIs: Personal loans for debt consolidation can usually be offered at relatively lower interest rates, enabling borrowers to save more on interest.
  • Improves credit score: Prevents the risk of default and a drop in credit score.
  • Better financial tracking: One merged loan helps in maintaining an accurate and better track of finances.

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Who Should Consider a Debt Consolidation Loan?

  • Multiple credit card dues
  • Multiple personal loans
  • High-interest debt
  • Too many EMI payments
  • Difficulty tracking repayment dates

Signs You Need Personal Loan for Debt Consolidation

  • Paying minimum due on cards
  • Multiple active loans
  • Frequent EMI misses
  • Credit utilization above 50%
  • Debt stress

Which Banks Offer Debt Consolidation Loans in India?

Bank Loan Amount Interest Rate Tenure
HDFC Bank Personal Loan  Up to Rs. 50 lakh Starting from 9.99% Up to 5 years
ICICI Bank Personal Loan Up to Rs. 50 lakh Starting from 9.99% Up to 6 years
SBI Personal Loan Up to Rs. 50 lakh Starting from 10.00% Up to 7 years
Axis Bank Personal Loan Up to Rs. 40 lakh Starting from 9.99% Up to 7 years
IndusInd Bank Personal Loan Up to Rs. 50 lakh Starting at 10.49 Up to 4 years
Kotak Mahindra Bank Personal Loan Up to Rs. 1 crore Starting from 10.99% Up to 6 years

Debt Consolidation Loan Interest Rates

Personal loan debt consolidation interest rate starts from 9.98% p.a. However, the final loan interest rate will depend on multiple factors, including credit score, income type & range, etc.

Bank/NBFCInterest Rates (% p.a.)Processing Fees
Aditya Birla Finance10.99 onwardsUp to 4%
Axis Bank9.99 onwards*Up to 2%
Bank of Baroda10.15-18.00Up to 2% (Max. Rs. 10,000)
Bajaj Finance Limited10.00-30.00Up to 3.93%
Bank of India10.85-16.15Up to 1% (Min. Rs. 250; Max. Rs. 15,000)
Bank of Maharashtra8.75-13.55Up to 1% (Max. Rs. 10,000)
Canara Bank9.70-15.15Up to 0.5% (Max. Rs. 5000)
Central Bank of India9.85-11.65Up to 1%
Cholamandalam IFC10.00-28.004% - 6%
Dhani Loans & Services Ltd.13.99 onwards3% onwards
Federal Bank12.00 - 22.50*Up to 2%
HDB Financial Services10.00 - 35.00Up to 5.90%
HDFC Bank9.99 onwardsUp to Rs 6,500
Hero FincorpUp to 30*2.3% - 3%
HSBC Bank9.75 onwardsUp to 2%
ICICI Bank9.99 onwardsUp to 2%
IDFC FIRST Bank9.99 onwardsUp to 2%
IIFL Finance12.00 - 28.002% - 9%
Indian Overseas Bank10.25 onwardsUp to 0.75%
IndusInd Bank10.35 onwards*Up to 3.5%
Kotak Mahindra Bank9.98 onwards*Up to 5%
L&T Finance11.00 onwardsUp to 3%
Mahindra Finance8.00 - 25.002% of loan amount or Rs. 5,000, whichever is lower
Mannapuram Finance18.00 - 24.001% of loan amount
Moneyview14.00 onwards2% onwards
Muthoot Finance13.50 onwardsVaries for each application
Piramal Finance12.14 onwardsUp to 5%
Poonawalla Fincorp9.99 onwardsUp to 3%
Punjab & Sind Bank9.60-13.850.50% - 1%
Punjab National Bank10.25-16.80Up to 1%
Shriram Finance11.00 onwardsUp to 5%
Tata Capital10.99 onwardsUp to 3.5%
UCO Bank9.95 - 13.20Up to 1% (Min. Rs. 750)
Union Bank of India8.75 - 12.55Up to 1% (Max. Rs. 7,500)

*Paisabazaar special rates


Note: Rates as of 23rd June 2026

Debt Consolidation Loan Eligibility

  • Age: 
    • A minimum of 21 years at the time of loan application
    • A maximum of 65 years at the time of loan maturity
  • Salary: A minimum salary of Rs. 15,000 per month
  • Credit score: A credit score 760+ (preferably)
  • Employment: A year of experience in the current organization

Documents Required

  • KYC Documents: Aadhaar card, PAN card, etc.
  • Address Proof: Electricity bill, Passport, Aadhaar card, etc.
  • Income Documents: Salary slip of last 3-6 months
  • Bank Statements: Last 6 months of bank statements

How to Apply for Debt Consolidation Loan Online?

  • Visit the Paisabazaar loan app
  • Head to the personal loan section
  • Enter the asked details
  • Compare eligible offers
  • Choose and apply for the loan amount best for debt consolidation

Fees and Charges

The fees and charges on personal loan for debt consolidation are mentioned below:

Charge Type Applicable
Processing Fee Up to 4% of the loan amount
Prepayment Charges Up to 5%
Foreclosure Charges Up to 5%
Loan Cancellation Charges Usually around Rs 3,000
EMI Bounce Charges Up to Rs. 450 per instance

Debt Consolidation Loan vs Credit Card Balance Transfer

Feature Debt Consolidation Loan Credit Card Balance Transfer
Purpose Combine multiple debts (personal loans, credit cards, consumer loans, etc.) into a single loan Transfer outstanding credit card balance(s) to another credit card with a lower interest rate
Types of Debt Covered Multiple types of loans Credit card debt only
Repayment Fixed monthly EMI over a predetermined tenure Monthly credit card payments; may convert to EMI depending on the issuer
Interest Rate Usually starts from around 9.99% p.a. (varies by lender and borrower profile) Introductory low or 0% interest for a short period, after which the regular credit card interest rate applies
Loan Amount Based on the borrower's eligibility and total outstanding debt Limited by the available credit limit on the new credit card
Repayment Tenure Fixed tenure, typically 1–7 years (varies by lender) Promotional balance transfer period, usually 3–24 months, or as per issuer's terms
Number of Payments One EMI for the consolidated loan One payment to the new credit card issuer
Best Suited For Borrowers with multiple loans or high-interest debts looking for a single, manageable EMI Cardholders looking to reduce interest on existing credit card debt for a limited period
Main Benefit Simplifies repayment and can reduce the monthly EMI Helps save on interest if the outstanding balance is repaid during the promotional period
Key Limitation A longer tenure may increase the total interest paid If the balance is not cleared before the promotional period ends, regular (often high) credit card interest rates may apply.

Debt Consolidation vs Debt Settlement

Factor Debt Consolidation Debt Settlement
Credit Score Impact Lower Severe
Total Debt Reduction No Possible
Repayment Full Partial
Risk Lower Higher
Recommendation Recommended Not recommended
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FAQs

Is debt consolidation good for credit score?

Yes, debt consolidation can help borrowers prevent missed EMIs, leading to an improved credit score.

Can I consolidate credit card debt into a personal loan?

Yes, you can use a personal loan to pay off all your dues.

Which banks offer debt consolidation loans in India?

Paisabazaar offers the best personal loan offers for debt consolidation in India. Borrowers can compare loan offers from top lenders at Paisabazaar and apply for the best-suited one.

What credit score is required for a debt consolidation loan?

A credit score of 760+ is preferred by lenders for debt consolidation loans in India.

Can I consolidate multiple personal loans?

Yes, you can consolidate multiple personal loans and credit card dues.

What is the maximum amount available under a debt consolidation loan?

The maximum loan amount borrowers can avail for debt consolidation is Rs. 50 lakh,

Does debt consolidation affect CIBIL score?

Yes, taking a personal loan for debt consolidation might drop your score temporarily. However, the score recovers once the repayments are made on time.

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Paisabazaar is a loan aggregator and is authorized to provide services on behalf of its partners.

The APR (Annual Percentage Rate) of a personal loan is its annualised cost of borrowing, which includes the interest rate as well as the processing fees, documentation fees and other fees charged during the loan origination. The APR is expressed in the form of a percentage and thus, allows personal loan applicants to detect personal loan schemes offered at lower interest rates but with higher processing fees and/or other charges.

The APR of personal loans usually ranges between 11.29% to 35%. For example, assume that you have availed a personal loan of Rs. 5 lakhs @ 10.50% p.a. with a repayment tenure of 5 years. The processing fee charged for this loan is 1.5% of the loan amount, which amounts to Rs 7,500. Therefore, the total borrowing cost of your personal loan will be Rs 1,52,317 and its APR will be 11.16%.

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