How can debt consolidation with a personal loan save me money?

Debt consolidation with a personal loan can be quite a smart move to save money and simplify your finances, especially in the Indian market as of 2025. This approach means taking out a new personal loan to pay off many existing debts like credit card balances, other personal loans, or even medical bills. By doing this, you combine all your outstanding debts into a single loan with a fixed monthly EMI.

Here’s how debt consolidation with a personal loan can save you money:

• Lower interest rates: Personal loans often come with lower interest rates compared to credit cards and some other unsecured debts. This means you pay less interest overall reducing your total repayment amount.
• Single EMI: Managing one EMI each month is easier than juggling several payments with different due dates. This lowers your risk of missing a payment and incurring late fees.
• Improved cash flow: With a lower EMI you free up more money for your monthly budget, making it easier to manage your finances.
• Better credit score: Timely repayments on your consolidated loan can help improve your credit score over time opening up better financial opportunities in the future.

Before consolidating always check that the personal loan interest rate and terms are genuinely better than your current debts. Factor in processing fees or prepayment charges on old loans. Avoid taking on new debt after consolidation as this can defeat the purpose and lead to more financial stress. Debt consolidation works best when it reduces your overall cost, streamlines your payments, and helps you regain control over your financial goals.