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Multiple debts can sometimes cause you distress. You may yearn to get out of it as soon as possible. Debt consolidation is a great financial option that can merge multiple credit card bills and loans. This method is very effective especially when you have higher interest loans and credit card debts.
By paying off all the other debts, you will now have a single loan and single EMI every month. The overall amount to be paid each month to various lenders would have reduced which can offer you a sigh of relief from overall debt.
Personal loan is an unsecured loan which does not require any collateral. Often, it is not possible to get approved for a personal loan when you have multiple debts as the lenders consider debt to income ratio seriously. However, the approval rate is higher if the objective of the loan is to consolidate all your debts. Here is a compilation of best personal loans in India that can be used for debt consolidation.
Banks And Online Lenders Offering Personal Loans For Debt Consolidation
Finding a lender who provides an unsecured loan for debt consolidation can be a challenging task. To make things easier, we have listed out the lenders who are willing to offer personal loans or debt consolidation loans.
HDFC Bank Personal Loan
- Attractive interest rates starting from 10.50% - 21%
- Loan amount up to Rs. 40 Lakhs
- Tenure up to 5 years
- You should be a minimum of 21 years old and a maximum of 60 years old.
- You should have a minimum monthly income of Rs. 25,000.
- Pre-approval offers are given to select customers.
- The loan amount is sanctioned in just 1 working day after documentation.
SBI Xpress Credit Personal Loan
- Loan amount up to Rs. 20 Lakhs
- Interest rate from 10.60% - 12.60%
- Tenure up to 6 years
- Minimum monthly income should be Rs. 15,000.
- Minimal documentation
- Processing fee is 1% of the loan amount
Axis Bank Personal Loan
- Loan amount from Rs. 50,000 to Rs. 15 Lakhs
- Minimum age limit is 21 years
- Tenure up to 5 years
- The interest rate starts from 10.49% onwards
- Minimal documentation
- Avail balance transfer facility to ease excess loan burden
- Earn Edge Reward points on every transaction
Citibank Personal Loan
- Debt Consolidation Loan amount up to Rs. 15 Lakhs
- Disbursal in 2 days
- Tenure up to 5 years
- Interest rate starts from 9.99% - 16.00%
- Processing charges up to 2.00% of the loan amount
- Minimal documentation
- Top up facility available
Bajaj Finserv Debt Consolidation Loan
- Bajaj Finserv Debt Consolidation loans in the form of Loan Against Property
- Get loan amount up to Rs. 5 crores, based on the property value, to conveniently consolidate and repay all your debts
- Flexible tenure: Self-employed borrowers can get up to 14 years to repay the loan
- Attractive interest rates of 8.25% - 18.00%
- Processing fees up to 6% of loan amount
- Disbursal in 24 hours
- Pre-approved offers and deals
- Minimal documentation
- Quick online application process
Lendbox Debt Consolidation Loans for Credit Card Settlement & Informal Debts
- Loan amount from Rs. 5,000 to Rs. 5 Lakhs
- Interest rate starting from 11.49% onwards
- Paperless process
- No pre-closure charges
- Your monthly income should be minimum of Rs. 25,000
- Processing fee 2% to 6% of the loan amount
- Loan tenure up to 36 months
RupeeCircle Debt Consolidation Loan
- Unsecured loan for debt consolidation
- Repayment tenure of up to 36 months
- No prepayment charges
- Approval in 2 to 3 working days
- Fixed interest rates
Faircent Debt Consolidation Loan
- Loan amount up to Rs. 10 Lakhs
- Interest rate from 12% to 36%
- Tenure: 6 to 36 months
I2iFunding Debt Consolidation Loan
- Tenure from 3 months to 24 months
- Loan amount is up to Rs. 3 Lakhs
- Fixed interest rates based on credit profile
- Minimum credit score requirement is more than 600
- Should have a minimum monthly salary of Rs. 20,000 who live in their own house and Rs. 25,000 for rented house applicants.
- No prepayment penalty
Applying for the above loans do not require any security. There are various other lenders who offer collateral free loans only up to a certain amount.
How Does Personal Loan For Debt Consolidation Affect Your Credit Health?
A personal loan for debt consolidation combines multiple debts and thus reduces your monthly EMI outgo. If you have a bad credit with multiple debts, a debt consolidation loan is the most convenient option that can help improve your credit score. Let’s assume you have a credit card bill to be paid, a personal loan and a gold loan. Repaying all of them can be stressful as a large sum of money is required each month. A debt consolidation loan can help combine all into one big loan. You will now have a single EMI each month at a tenure that is convenient for you.
If you have a bad credit, repaying all the debts at one go can prevent a further drop on your credit score. Having a 100% positive payment history is essential for good credit health. With the prepayment of all the loans, your credit score remains intact. Consistent repayment on your fresh loan can guarantee you a stellar credit score over time.
If you have a good credit score, and you have taken this loan to consolidate your debts, you will see an increase in your credit score due to prepayment. On regular repayment on the fresh loan, a stellar credit score is guaranteed which can help you make eligible for multiple credits from all kinds of borrowers.
Bottomline
Taking another loan to consolidate all other debts does mean that you have reduced the debt burden. It only means you have restructured the loan as per your convenience and the debt still remains the same until you make the full repayment. A debt consolidation loan is essential and helpful for individuals who have bad credit with multiple debts. It gives them a chance to start all over again.
FAQs of Which Are The Best Personal Loans For Debt Consolidation?
1: What is a debt consolidation loan?
A debt consolidation loan is a single loan that combines all your existing loans and credit card outstanding under a single loan. This allows you better loan management with a single EMI and single interest rate.
2: Is a debt consolidation loan a secured or unsecured loan?
There are both types. A few lenders offer debt consolidation as a loan against property loan while many lenders offer unsecured loans for debt consolidation.
3: What is the loan amount I can get under debt consolidation loans?
This again depends on the lender. While large private sector banks offer up to Rs.25 lakhs for debt consolidation, smaller P2P lenders offer around Rs.3 lakhs debt consolidation loans.
4: What is the typical interest rate on debt consolidation loans?
Debt consolidation loans are technically unsecured personal loans and have similar interest rates. The current market has an interest rate starting at 10% and goes up to 18%.
5: What kind of repayment tenure can I get with debt consolidation loans?
Lenders generally offer a repayment tenure of up to 5 years.