Debt Consolidation Calculator India — FY 2025-26

Consolidation makes sense when: (1) the consolidation rate is meaningfully lower than your weighted average current rate, (2) you won't use freed-up credit lines to add more debt, (3) you can qualify for the consolidation loan at the stated rate. The goal is lower total interest, not just lower monthly payments — a 5-year consolidation at a lower rate can cost more total interest if you extend the timeline too much.

Personal loan (most common): 12–24% in India vs credit card's 36%. Balance transfer: 0% promotional rate for 3–6 months then normal rate. Home equity loan: lowest rate (home loan rate) but puts your home at risk. Employer salary advance: zero interest in some companies. Always compare APR, not just the headline rate.

Short-term: a hard inquiry drops score 5–10 points. Medium-term: paying off revolving debt (credit cards) improves utilisation ratio — scores improve. Long-term: disciplined repayment of consolidation loan improves score significantly. The concern is if you keep using the paid-off credit cards, creating more debt on top of the consolidation loan.

The most common failure: you consolidate credit card debt into a personal loan, feel relieved, then start using the now-zero-balance credit card again. Within a year, you have the original personal loan PLUS new credit card debt. The solution: cut up the cards or freeze them after consolidation. The consolidation only works if you don't refill the pipes.

Education loans have specific rules. In India, CIBIL tracking means default affects future loans — pay them. In the US, federal loans have income-based repayment and forgiveness programs that disappear if you refinance into private loans. Never refinance federal student loans into private loans unless you've fully understood what you're giving up.