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

  1. Attractive interest rates starting from 11.25%

  2. Loan amount up to Rs. 40 Lakhs

  3. Tenure up to 7 years

  4. You should be a minimum of 21 years old and a maximum of 60 years old.

  5. You should have a minimum monthly income of Rs. 15,000.

  6. Pre-approval offers are given to select customers.

  7. The loan amount is sanctioned in just 1 working day after documentation.

SBI Xpress Credit Personal Loan

  1. Loan amount up to Rs. 20 Lakhs

  2. Interest rate from 11.90% to 17%

  3. Tenure up to 6 years

  4. Minimum monthly income should be Rs. 15,000. 

  5. Minimal documentation

  6. Processing fee is 1% of the loan amount

Axis Bank Personal Loan

  1. Loan amount from Rs. 50,000 to Rs. 15 Lakhs
  2. Minimum age limit is 21 years
  3. Tenure up to 5 years
  4. The interest rate starts from 15.75% onwards
  5. Minimal documentation

Citibank Personal Loan

  1. Loan amount up to Rs. 30 Lakhs

  2. Disbursal in 2 days

  3. Tenure up to 5 years

  4. Interest rate starts from 11.25% onwards

  5. Minimal documentation

  6. Top up facility available

Bajaj Finserv Debt Consolidation Loan

  1. Get loan amount up to Rs. 25 Lakhs

  2. Flexible tenure

  3. Attractive interest rates

  4. Disbursal in 24 hours

  5. Pre-approved offers and deals

  6. Minimal documentation 

  7. Quick online application process

Lendbox Debt Consolidation Loans for Credit Card Settlement & Informal Debts

  1. Loan amount from Rs. 25,000 to Rs. 5 Lakhs

  2. Interest rate starting from 11.49% onwards

  3. Paperless process

  4. No pre-closure charges

  5. Your monthly income should be minimum of Rs. 25,000 

  6. You must be a minimum of 22 years old

  7. You must have an Indian bank account

  8. You must have a valid ID Proof

  9. You must be an Indian resident

  10. Processing fee 2% to 6% of the loan amount

  11. Loan tenure 3 to 60 months

DBS Refinance Loan

  1. For transferring your high cost loan or consolidating all your debts

  2. Online application process

  3. Attractive interest rates

  4. Minimal documentation process

RupeeCircle Debt Consolidation Loan

  1. Tenure: 3 to 24 months

  2. No prepayment charges

  3. Approval in 2 to 3 working days

  4. Fixed interest rates

Faircent Debt Consolidation Loan

  1. Loan amount up to Rs. 10 Lakhs

  2. Interest rate from 12% to 36%

  3. Tenure: 6 to 36 months

I2iFunding Debt Consolidation Loan

  1. Tenure from 3 months to 24 months

  2. Loan amount is up to Rs. 3 Lakhs

  3. Fixed interest rates based on credit profile

  4. Minimum credit score requirement is more than 600

  5. Should have minimum monthly salary of Rs. 20,000 who live in their own house and Rs. 25,000 for rented house applicants. 

  6. 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 amount 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 100% positive payment history is essential for a 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, still 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 convenient 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.