Simplify Your Finances with Debt Consolidation
Merge multiple debts like credit card bills and personal loans into one single, manageable monthly payment. It's a popular strategy in India for those seeking a clear path to financial freedom.
Credit Card Balance
Personal Loans
Retail EMIs
Medical Bills
How Debt Consolidation Works
A straightforward, step-by-step guide to consolidating your debts and taking back control of your financial health.
1. Assess Your Debts
Start by listing all your existing debts. Note down the total amount owed, interest rates, and monthly EMIs for each.
1. Assess Your Debts
Start by listing all your existing debts. Note down the total amount owed, interest rates, and monthly EMIs for each.
1. Assess Your Debts
Start by listing all your existing debts. Note down the total amount owed, interest rates, and monthly EMIs for each.
2. Research Your Options
Explore consolidation methods like a personal loan, which is a popular choice, or a balance transfer credit card.
2. Research Your Options
Explore consolidation methods like a personal loan, which is a popular choice, or a balance transfer credit card.
2. Research Your Options
Explore consolidation methods like a personal loan, which is a popular choice, or a balance transfer credit card.
An Illustrative Example
Consider Riya, who has three outstanding debts: a credit card bill of ₹50,000 at 36% p.a., a personal loan of ₹1,00,000 at 18% p.a., and a consumer durable loan of ₹50,000 at 22% p.a. Her total monthly EMI is significant.
She takes a single personal loan of ₹2,00,000 at a lower interest rate of 14% p.a. to pay off all three. Now, Riya only has one, lower EMI to pay, saving her a substantial amount in interest and reducing her monthly financial stress.
Key Benefits of Debt Consolidation
Consolidating your debt isn't just about simplification; it comes with several powerful advantages that can improve your financial well-being.
Simplified Payments
Managing one EMI is far less stressful than tracking multiple due dates, reducing the risk of missed payments.
Improved Credit Score
Consistent, on-time payments on your consolidated loan can positively impact your CIBIL score over time.
Lower Interest Rates
Personal loans often have lower interest rates than credit cards, saving you significant money over the loan's tenure.
Financial Discipline
Committing to a single repayment plan encourages better budgeting and helps build responsible financial habits.
Fixed Repayment Shedule
A set repayment period gives you a clear end date for your debt, providing peace of mind and a definite goal.
Ready to Take the Next Step?
Our experts at Mudra Mitra are here to guide you. Explore your options and find the best path to becoming debt-free.
Things to Consider Before Consolidating
Debt consolidation is a powerful tool, but it's important to be aware of the potential drawbacks to make an informed decision.
Simplified Payments
Managing one EMI is far less stressful than tracking multiple due dates, reducing the risk of missed payments.
Improved Credit Score
Consistent, on-time payments on your consolidated loan can positively impact your CIBIL score over time.
Lower Interest Rates
Personal loans often have lower interest rates than credit cards, saving you significant money over the loan's tenure.
Financial Discipline
Committing to a single repayment plan encourages better budgeting and helps build responsible financial habits.
Fixed Repayment Shedule
A set repayment period gives you a clear end date for your debt, providing peace of mind and a definite goal.
-
How long does debt consolidation stay on my credit report?A debt consolidation loan is treated like any other instalment loan and will remain on your credit report for up to 10 years after it's closed. A history of timely payments will positively affect your score, while missed payments will harm it.
-
Can a debt consolidation loan help me save money?Yes, absolutely. If you secure a new loan with an interest rate that is lower than the average rate of your existing debts (especially high-interest credit cards), you will reduce the total amount of interest you pay over time.
-
What happens if I miss payments on my consolidation loan?Missing payments can significantly harm your credit score. It will also lead to late fees and penalty interest. Consistent defaults can lead the lender to take legal action to recover the amount.