Debt Consolidation Loan — Combine Your Debts in 2026

A debt consolidation loan is a personal loan you use to pay off several high-interest debts — usually credit card balances and small app loans — leaving you with one EMI at a lower rate.

Credit card interest in India commonly runs at 36–45% a year. Replacing it with a personal loan at 11–16% can cut your interest bill sharply and give you a fixed date to be debt-free.

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Credit Card Interest

36–45%

Per year, typical

Personal Loan Rates

From 8.9%

Depends on profile

Example Saving

₹1,30,786

₹3L over 36 months

EMIs After

1

Instead of many

Lenders to Compare for Debt Consolidation

Lowest starting rates with loan amounts of ₹5 lakh or more.

Lenders to Compare for Debt Consolidation
LenderInterest RateMax AmountMax TenureProcessing Fee
Punjab National BankLow PSU Rate8.9%–14.5%₹10 lakh60 months1% + GST
Union Bank of IndiaLowest Rate8.9%–13.5%₹15 lakh60 months0.5%
Canara Bank9.9%–15%₹10 lakh60 months0.5%
Poonawalla FincorpLowest NBFC Rate9.99%–29%₹30 lakh60 months0–2% (NIL for select customers)
Axis Bank10.49%–22%₹40 lakh60 months1.5%–2%
IDFC FIRST Bank10.49%–23.99%₹40 lakh84 monthsUp to 2%
IndusInd Bank10.49%–26%₹50 lakh60 monthsUp to 3%
HDFC BankMost Popular10.5%–24%₹40 lakh60 monthsUp to 2.5% (min ₹999)
ICICI BankHigh Limit10.65%–16%₹50 lakh72 monthsUp to 2.25% (min ₹999)
Bank of Baroda10.9%–18.25%₹10 lakh84 months2%

Last reviewed August 2026. Actual terms depend on your credit profile and the lender's assessment. GST at 18% applies on fees.

How Much Can You Save?

Say you owe ₹3 lakh across credit cards at 36% a year and want to clear it in 36 months.

Paying off ₹3 lakh in 36 months

EMI at 36% (cards)
₹13,741
EMI at 13% (loan)
₹10,108
Interest saved
₹1,30,786

Is Debt Consolidation Right for You?

Works well when

  • Your debts carry high interest (cards, app loans)
  • You have steady income to pay one EMI
  • Your credit score still qualifies for a lower rate
  • You stop adding new card debt

Be careful when

  • The new rate isn't much lower
  • You'd stretch the tenure a lot just to lower the EMI
  • You may keep spending on the cleared cards
  • Fees and charges cancel out the saving

Expert Tips

  1. 1List every debt with its rate and outstanding amount before you apply.
  2. 2Borrow only enough to clear the high-interest debts.
  3. 3Pay off the cards directly on disbursal — don't let the money sit in your account.
  4. 4Keep card usage low after consolidation so you don't build debt again.

Frequently Asked Questions — Debt Consolidation Personal Loan

What is a debt consolidation loan?

It is a personal loan used to repay several existing debts, so you have a single EMI — ideally at a lower interest rate than your current debts.

Can I use a personal loan to pay off credit card debt?

Yes. This is the most common use of debt consolidation, since personal loan rates are usually much lower than credit card interest.

Does debt consolidation hurt my credit score?

The new application causes a hard enquiry, but paying off card balances lowers your credit utilisation, which usually helps your score over time.

What credit score do I need for a consolidation loan?

For the best rates, 700+ is ideal. Some lenders accept lower scores, but the rate may be too high to make consolidation worthwhile.

Should I close my credit cards after consolidating?

Not necessarily — older cards help your credit history. Keep them with low or no usage and pay any balance in full each month.

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Figures last reviewed August 2026 and shown for information only. Interest rates, fees and eligibility are set by each lender and depend on your credit profile — confirm the final terms in the lender's Key Fact Statement before you sign. RateCut is a loan marketplace, not a lender.