Debt Consolidation Calculator

What exactly is Debt Consolidation?

Debt consolidation is the financial strategy of taking out a single new loan to pay off multiple existing debts—such as credit card balances, personal loans, or app-based micro-loans. The primary goal is to secure a lower overall interest rate, reduce your monthly out-of-pocket payment (EMI), and simplify your finances so you only have to track one due date instead of several.

Which banks or institutions support Debt Consolidation?

Most major commercial banks and Non-Banking Financial Companies (NBFCs) in India offer debt consolidation, usually in the form of a high-value Personal Loan or a Loan Against Property. Top institutions include:

• Public Sector Banks: State Bank of India (SBI), Bank of Baroda, Punjab National Bank.
• Private Sector Banks: HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank.
• Established NBFCs: Bajaj Finserv, Tata Capital, Aditya Birla Capital.

What are the crucial things I need to know about Debt Consolidation?

Consolidating debt is a major financial decision. Here is what you need to evaluate:

• Interest Rates & Savings: The new loan must have a lower interest rate than the average of your current debts. If it doesn't, you aren't actually saving money.
• Hidden Fees: Watch out for processing fees on the new loan and pre-payment/foreclosure penalty charges on your old loans. These fees can sometimes eat up your potential savings.
• Credit Score Impact: Applying for a new loan will cause a minor, temporary dip in your credit score due to the "hard inquiry." However, consistently paying off the new consolidated loan will ultimately improve your score.
• Financial Discipline: Once your credit cards are cleared by the consolidation loan, you must avoid racking up new balances on them. Otherwise, you will end up with double the debt!

Do private players support debt consolidation, and can they be trusted?

Yes, many private players—specifically modern Fintech companies and NBFCs (like Navi, PaySense, KreditBee, or CRED)—support debt consolidation by offering instant personal loans. But the question of trust is critical.

How to know if they can be trusted:

• RBI Registration: You should only borrow from an entity that is registered as an NBFC with the Reserve Bank of India (RBI), or a platform that operates in direct partnership with an RBI-regulated bank.
• Transparency: Trusted private players will clearly display their interest rates, processing fees, and late payment charges upfront.
• Beware of Loan Sharks: Never trust unregistered loan apps that ask for advance fees to approve a loan, request access to your contacts/photo gallery, or use aggressive recovery tactics. Always check reviews and RBI certification before applying.