What Are Debt Consolidation Loans?

Debt consolidation loans combine multiple debts, such as credit card balances, personal loans, or other liabilities, into a single loan with one monthly payment. Loanpao helps individuals in India streamline their finances in 2025 with these loans.

Benefits of Debt Consolidation Loans

Key advantages for borrowers in 2025:

  • Single Payment: Simplifies multiple EMIs into one manageable payment.
  • Lower Interest Rates: Often lower than credit card rates (12–18% p.a. vs. 24–36% p.a.).
  • Reduced Financial Stress: Easier to track and manage one loan.
  • Flexible Tenure: Repayment periods from 1–7 years for affordability.
  • Credit Score Improvement: Timely payments can boost your credit score.

Eligibility Criteria for Debt Consolidation Loans

Common requirements in 2025:

  • Age: 21–60 years for salaried or self-employed individuals.
  • Income: Minimum monthly income of ₹25,000 for salaried, ₹3 lakh p.a. for self-employed.
  • Credit Score: Preferably 700+ for better rates and approval chances.
  • Debt-to-Income Ratio: Below 50% to ensure repayment capacity.
  • Documentation: KYC, income proof, and existing loan/credit card statements.

Debt Consolidation Loan Comparison

Typical terms from top lenders in 2025:

Lender Type Interest Rate Loan Amount Tenure Processing Fee
Banks 10–15% p.a. ₹1 lakh–₹50 lakh 1–7 years 0.5–1% of loan amount
NBFCs 12–18% p.a. ₹50,000–₹25 lakh 1–5 years 1–2% of loan amount

How to Apply for a Debt Consolidation Loan with Loanpao

Steps to simplify your debts:

  1. Assess Your Debts: List all existing loans and credit card balances.
  2. Check Eligibility: Verify income, credit score, and debt-to-income ratio.
  3. Calculate EMIs: Use Loanpao’s EMI Calculator to plan repayments.
  4. Compare Lenders: Review offers on Loanpao’s platform.
  5. Submit Application: Apply via Loanpao’s application page with documents.

Tips for Choosing the Best Debt Consolidation Loan

Maximize your loan benefits:

  • Compare Interest Rates: Seek lower rates than your existing debts.
  • Check Total Costs: Account for processing fees and prepayment penalties.
  • Choose Appropriate Tenure: Balance EMI affordability with total interest paid.
  • Negotiate Terms: Use Loanpao to secure better rates or waived fees.
  • Monitor Credit Score: Timely repayments improve future borrowing capacity.

Frequently Asked Questions

Credit card balances, personal loans, and other unsecured debts can typically be consolidated.

Most are unsecured, but some lenders may require collateral for larger amounts.

Up to ₹50 lakh, depending on eligibility and lender policies.

Timely repayments can improve your score, while missed payments may harm it.

Loanpao offers lender comparisons, EMI calculators, and expert application support.

KYC documents, income proof, and statements of existing loans or credit cards.

How to Get Started with Loanpao

Simplify your debt management with Loanpao:

  1. List all existing debts to determine the consolidation amount.
  2. Use Loanpao’s EMI Calculator to budget repayments.
  3. Compare lender offers on Loanpao’s platform.
  4. Apply via Loanpao’s application page with expert guidance.

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