When you have balances on two or three cards and a couple of small loans, it's easy to miss a due date and the interest piles up. A debt consolidation loan is a personal loan used to pay all of them off, leaving you with one EMI, one due date and usually a lower rate than revolving card debt.
How it works
- List every debt with its outstanding amount, interest rate and EMI.
- Take a personal loan for the total you want to clear.
- Pay off the cards and small loans in full, and collect closure confirmations.
- Repay the single personal loan in fixed EMIs.
When it saves you money
- The personal loan's interest rate (and APR, including fees) is lower than the average rate on your current debts — most often true for credit card balances.
- You stop using the cards for revolving balances after clearing them. Otherwise you end up with the loan and new card debt as well.
- The new EMI fits your monthly budget. Check it with the EMI calculator.
When it may not
- Your debts are already low-cost or almost repaid.
- Prepayment charges on existing loans eat up the saving — see prepayment and foreclosure.
- The habits that created the debt don't change.
A boost for your credit score
Clearing card balances lowers your credit utilisation, and one on-time EMI is easier to manage than many. Over time this can help your score — see how to improve your CIBIL score.
How to apply with Oxon Fintech
Apply once and see offers from our lending partners that fit your profile. Read about eligibility and personal loan vs credit card.