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 in India

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What is a Debt Consolidation Loan?
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:
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:
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Who Should Consider a Debt Consolidation Loan?
Signs You Need Personal Loan for Debt Consolidation
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/NBFC | Interest Rates (% p.a.) | Processing Fees |
|---|---|---|
| Aditya Birla Finance | 10.99 onwards | Up to 4% |
| Axis Bank | 9.99 onwards* | Up to 2% |
| Bank of Baroda | 10.15-18.00 | Up to 2% (Max. Rs. 10,000) |
| Bajaj Finance Limited | 10.00-30.00 | Up to 3.93% |
| Bank of India | 10.85-16.15 | Up to 1% (Min. Rs. 250; Max. Rs. 15,000) |
| Bank of Maharashtra | 8.75-13.55 | Up to 1% (Max. Rs. 10,000) |
| Canara Bank | 9.70-15.15 | Up to 0.5% (Max. Rs. 5000) |
| Central Bank of India | 9.85-11.65 | Up to 1% |
| Cholamandalam IFC | 10.00-28.00 | 4% - 6% |
| Dhani Loans & Services Ltd. | 13.99 onwards | 3% onwards |
| Federal Bank | 12.00 - 22.50* | Up to 2% |
| HDB Financial Services | 10.00 - 35.00 | Up to 5.90% |
| HDFC Bank | 9.99 onwards | Up to Rs 6,500 |
| Hero Fincorp | Up to 30* | 2.3% - 3% |
| HSBC Bank | 9.75 onwards | Up to 2% |
| ICICI Bank | 9.99 onwards | Up to 2% |
| IDFC FIRST Bank | 9.99 onwards | Up to 2% |
| IIFL Finance | 12.00 - 28.00 | 2% - 9% |
| Indian Overseas Bank | 10.25 onwards | Up to 0.75% |
| IndusInd Bank | 10.35 onwards* | Up to 3.5% |
| Kotak Mahindra Bank | 9.98 onwards* | Up to 5% |
| L&T Finance | 11.00 onwards | Up to 3% |
| Mahindra Finance | 8.00 - 25.00 | 2% of loan amount or Rs. 5,000, whichever is lower |
| Mannapuram Finance | 18.00 - 24.00 | 1% of loan amount |
| Moneyview | 14.00 onwards | 2% onwards |
| Muthoot Finance | 13.50 onwards | Varies for each application |
| Piramal Finance | 12.14 onwards | Up to 5% |
| Poonawalla Fincorp | 9.99 onwards | Up to 3% |
| Punjab & Sind Bank | 9.60-13.85 | 0.50% - 1% |
| Punjab National Bank | 10.25-16.80 | Up to 1% |
| Shriram Finance | 11.00 onwards | Up to 5% |
| Tata Capital | 10.99 onwards | Up to 3.5% |
| UCO Bank | 9.95 - 13.20 | Up to 1% (Min. Rs. 750) |
| Union Bank of India | 8.75 - 12.55 | Up to 1% (Max. Rs. 7,500) |
*Paisabazaar special rates
Note: Rates as of 23rd June 2026
Debt Consolidation Loan Eligibility
Documents Required
How to Apply for Debt Consolidation Loan Online?
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.
Personal Loan Articles
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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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Get up to ₹50 Lakhs starting at 9.98%*
Get up to ₹50 Lakhs starting at 9.98%*








