Debt Consolidation Loans in India

Let Us Understand Debt

Understanding the Debt Burden

If you reach the end of each month with hardly any money left over, you are not alone.
Millions of us face the same problem – month after month after month.

And there seems to be no way out.
Some of the money goes away paying the bills, some towards rent, a few thousand in food and entertainment, some to pay for essential purchases that have been put off for far too long – but and it is a BIG BUT – the bulk goes out to pay off EMIs and credit card bills.

You want a way out and start to save, but the few rupees you add up never seem to amount to anything.

The bank pays meagre interest on the savings or fixed deposit, and if you are lucky enough to earn some good interest, the tax takes care of any happiness.

The whole system seems to be rigged to put you in a permanent money shortage problem.

It is a very painful experience.

Think how painful it is to realize that you have to think twice before even spending Rs. 100?

But then you wonder, where do people get all the spare money to spend? Not everyone is born rich but go to any market and there seem to be innumerable shoppers buying away stuff left right and centre.

Questions to Ask to Solve Your Debt Problems

You ask yourself: where do they get all the money?

But the real question you are asking yourself is: “Why can’t I be like them?”

Why can’t I be happy like these shoppers?

Why can’t I not have to worry about my bills?

Why can’t I gift my children or my parents or even my beloved a small gift?

Why can’t you?

Because you can.

Solving Your Debt Problem

You can get out of debt. Become debt-free and live the life you want.

You just need to manage your money better and develop some real money smarts – the smarts that make people rich and wealthy.

So what do you need to do to be rich?

The first thing you need to do is to stop giving your money away for free to banks and financial institutions.

That means reducing your monthly debt burden.

The way to EASILY do this is with a DEBT CONSOLIDATION LOAN.

How Debt Consolidation Loans Help: Examples

Let us understand with an example.

Suppose you have two credit cards with high limits and a high-interest loan. You can easily take a lower-interest loan and pay off the costly loan and at least one credit card.

Let us say you pay around Rs. 5,000 on credit card no. 1 and Rs. 3,000 on card no. 2 every month, and the high-interest loan EMI is Rs. 10,000.

Now suppose you take a short-term consolidation loan to pay off the amount due on the 2 credit cards.
Let us further suppose your overall loan and card repayments reduce by only Rs. 1,000 each month after you take this low-interest loan.

Not much savings you would say, right?

But do you realize with the savings you make in one and a half to two years, you can take a 4-5 days holiday in Thailand, Sri Lanka or Goa?

Now does that make sense?

What if you can save more than Rs. 1,000 per month? You can likely take at least one memorable dream holiday each year.

So, start on the way to becoming rich and wealthy.

Reduce Your Debt Burden

But there is one person you need to guard against so you can be rich and wealthy: YOU.

Remember this: you are human. You will want things – now. Not later.

You will want the Thailand or Goa holiday now. Not later.

You will be moved to spend if you can. And if a credit card or a loan is at hand, guess what you will do?

And guess who will grow rich when you spend using your credit card? The shopkeeper may be, the bank certainly, but definitely not you.

And so take this superhuman first step to becoming rich and wealthy.

Frequently Asked Questions
Consolidation Loan FAQs

So, how does a debt consolidation loan work?

A consolidation loan, as the name suggests, consolidates all your loans into one so you can pay them off easily and with lower EMI cost.

Let us say that you have a car loan with an interest rate of say 12% and a personal loan with an interest rate of say 12.5%. You can pay them both off with a third loan that has a lower interest rate of say 9-10%.

You not only save money on the interest rate but the debt burden becomes easier to bear. You can choose to repay that loan earlier also if you want to get out of debt faster.

You can approach the same bank or another one that has more favourable interest rates and lower processing charges, if applicable.

Do I need to provide any security for a debt repayment loan?

As a rule, unsecured loans have a higher interest rate than secured loans.

It makes better sense to go with a secured loan if you have some collateral like LIC policies or NSC certificates or even immovable property such as land or a house, and are willing to put them with the bank for the duration of the loan period.

I have not seen this debt consolidation loan on the bank website.

In India, very few banks and financial institutions call a consolidation by its name. The reason is most of us in India do not even know there is a way to consolidate different loans and reduce our debt burden.

Banks call it by different names based on its type or how it is given (secured or not), etc. Some loans that can be used as consolidation loans in India are personal loans, secured loans and loans against property.