Debt consolidation: compare each loan before combining the balances
Combining repayments can simplify a calendar, but convenience and cost savings are separate benefits. Build an inventory of every debt before evaluating a consolidation proposal.
Compare debts individually first
Record each outstanding amount, remaining term, rate structure, closure cost and monthly payment. A costly short-term loan and a nearly finished low-cost loan may not both benefit from being refinanced. Compare the proposed replacement against the future payments you would otherwise make, including charges. A single lower EMI can come from stretching several debts over a much longer term.
A worked situation
Two hypothetical debts require ₹1.2 lakh and ₹2.4 lakh in remaining payments, or ₹3.6 lakh together. A replacement requiring ₹3.8 lakh plus upfront costs would be more expensive overall, even if the monthly collection is smaller. That may change cash flow, but it is not a saving.
Your next-step checklist
- List every remaining repayment schedule
- Check closure costs debt by debt
- Separate convenience from total-cost changes
Must every existing loan be consolidated?
No. Compare each debt's terms and costs. Combining only some obligations may produce a different result, subject to the replacement lender's assessment and conditions.
Official references and further reading
These links help you check current information. A provider-specific page describes that provider’s process; it is not a universal eligibility rule or a claim of partnership.
General educational information, not a personalised credit recommendation. Examples use assumed inputs. Rates, charges, eligibility and documents vary; confirm your own lender’s current written terms.