Top 6 Debt Consolidation Loan Strategies 2025
Table of Contents
What is Debt Consolidation?
I have a good amount of experience with Debt Consolidation Loans. It was my experience that I took my first loan in 2013 to buy my first bike (Passion Pro) of cost around 52000 and the EMI was 2500. As far as I remember I am listing my loans down here.
- Laptop in 2017 – 27000 @ 15%
- Refrigerator in 2017 – 37000 @ 15%
- Car in 2018 – 890000 @ 9%
- Loan Against Car 2019 – 250000 @ 15%
- Bike loan in 2020 – 90000 @ 11%
- Personal loan in 2022 – 250000 @ 10.9%
- There are more personal loans I took But I am unable to recall.
You know what happened I tried to consolidate all my existing loans to make one loan. Finally, I ended up with a 15,00,000 loan @ 11.55% in 2023. Now it is April 2025, loan outstanding amount stands at 8, 70,000. My Debt consolidation strategy is working. I share my experience with Debt Consolidation Loans, It may help you.
Debt consolidation means combining multiple existing debts — like credit card dues, personal loans, and BNPL (Buy Now Pay Later) bills — into one single loan. This new loan is called a debt consolidation loan and it comes with a lower interest rate, simpler EMI tracking, and longer repayment terms.
My Definition of Debt Consolidation from experience
“Combining all bad loans into a single bad loan with a lower interest rate — and maintaining good financial discipline — is called debt consolidation.”
My Definition from Exeperience
Many banks and NBFCs now offer debt consolidation loans online in our country. These loans can reduce your financial stress and help you become debt-free faster.
Why Consider Debt Consolidation?
- One EMI instead of many
- Lower interest rates
- Longer repayment tenure
- Better credit score over time
- Peace of mind with simplified finances
Strategy #1: Take a Debt Consolidation Loan from Banks or NBFCs
A debt consolidation loan is a personal loan taken to pay off all your existing unsecured loans. Here’s why it works:
- Fixed interest rates (10% to 16%)
- No collateral required
- Available to salaried and self-employed individuals
Popular Lenders in India: (Personal Loan EMI Calculator – No PAN card required)
| Bank/NBFC | Interest Rate (approx.) | Online Application |
|---|---|---|
| HDFC Bank | 10.5% – 17.5% | Yes |
| ICICI Bank | 10.25% – 16% | Yes |
| SBI | 11.15% – 14.5% | Yes |
| Tata Capital | 10.99% – 18% | Yes |
| Bajaj Finserv | 11% – 20% | Yes |
Strategy #2: Use Balance Transfer Credit Cards
This option works if most of your debt is on credit cards. Some banks offer 0% or low-interest balance transfers for the first 3–6 months.
- Transfer high-interest card debt to a new card
- Pay no interest during the promo period
- Avoid late fees and penalties
Pro Tip: Only use this strategy if you can repay the amount within the interest-free period.
Strategy #3: Use a Peer-to-Peer (P2P) Lending Platform
Online platforms like Faircent, Lendbox, or RupeeCircle offer personal loans through individual lenders.
- Lower interest rates than credit cards
- Flexible terms
- Paperless online application
Note: Make sure to check the platform’s credibility and lender reviews.
Strategy #4:Know Your Debt Consolidation Loan Eligibility Before You Apply
Before applying, it’s important to understand if you’re even eligible for a debt consolidation loan. While exact criteria may vary from bank to bank, here are the common eligibility requirements across India:
- ✅ Age: 21 to 60 years (varies slightly by bank)
- ✅ Income Proof: Minimum monthly salary (₹15,000–₹25,000 in most cases)
- ✅ Employment Type: Salaried or self-employed with stable income
- ✅ CIBIL Score: Usually 700 or above for quick approval
- ✅ Existing Debts: Should not exceed 50–60% of your income
- ✅ Banking Relationship: Existing customers may get better deals
💡 Tip: Even if you’re not eligible with a bank, try NBFCs or fintech platforms like KreditBee, PaySense, or CASHe. They often have flexible eligibility criteria.
Strategy #5: Borrow from Employers or Cooperative Societies
If you’re a salaried employee, check if your organization or local cooperative society provides low-interest employee loans.
- No credit check
- Very low interest (often 0% to 6%)
- No prepayment charges
Strategy #6: Liquidate Low-Yield Assets to Pay High-Interest Debt
You might be sitting on savings that are earning 4% in an FD, while paying 30% interest on a credit card. Not smart!
- Sell low-return assets (FDs, low-performing mutual funds)
- Use that money to clear high-interest debt
- Save thousands in interest
Frequently Asked Questions (FAQs)
Q1: What is a debt consolidation loan?
A debt consolidation loan is a personal loan taken to pay off multiple high-interest debts, combining them into one lower-interest EMI.
Q2: Which banks offer debt consolidation loans in India?
Major banks like HDFC, ICICI, SBI, Kotak Mahindra, and Axis Bank offer debt consolidation loans with competitive interest rates and flexible tenures.
Q3: What is the eligibility for a debt consolidation loan?
Eligibility usually includes:
Age: 21 to 60 years
CIBIL Score: 700+
Regular income proof (salary slip or ITR)
Loan documents of existing debt
Q4: Can I apply for a debt consolidation loan online?
Yes, many banks and NBFCs offer debt consolidation loans online through their websites or apps with instant approval features.
Q5: What is the meaning of debt consolidation?
Debt consolidation means combining multiple debts into one single loan to simplify repayment and reduce interest burden.
Q6: Are debt consolidation loans good?
Yes, they are effective in reducing your EMI burden, improving your CIBIL score, and helping you become debt-free faster if used wisely.
Q7: Which is the best debt consolidation loan in India?
It depends on your income and credit score. SBI and HDFC offer good options for salaried individuals, while Bajaj Finserv is more flexible for self-employed applicants.
Final Thoughts: Choose the Strategy That Fits You
Each strategy above has pros and cons. Choose the one that suits your situation best. Don’t forget:
- Never skip EMIs
- Avoid taking new loans while consolidating old ones
- Pay extra money towards the principal even If you have 1 rupee (I did this and reduced a 15 lakh loan to 8.7 lakhs in just two years)
- Increase income and reduce expenses wherever possible
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