Why Debt Consolidation is a Game-Changer in Managing EMIs

Nitin, a 28-year-old sales executive from Pune, was struggling with his finances. His monthly salary of ₹42,000 barely covered his expenses after paying 3 different EMIs. He had a personal loan of ₹2,00,000 with ₹8,500 monthly payments, credit card debt of ₹60,000 costing ₹5,200 each month, and a car loan of ₹1,50,000 with a ₹6,300 EMI. 

Together, these ₹20,000 in monthly payments left him constantly worried. 

Every month was the same stressful cycle – remembering different due dates, juggling payments, and watching his savings disappear. The high interest rates made it feel like he was running in place, never making real progress. 

His credit score dropped to 650 after missing 2 payments during a family emergency. 

Then his cousin suggested visiting a financial advisor. After looking at Nitin's situation, they proposed combining all his debts into one loan. The numbers surprised him—a single ₹4,10,000 loan at lower interest would mean just ₹14,200 monthly. That ₹5,800 monthly savings changed everything for Nitin. 

How exactly did this solution work? Read this blog to discover how debt consolidation could help you, like it helped Nitin.

1. Simplified Repayments

Debt consolidation simplifies EMI management by combining multiple loans into one. This approach reduces the complexity of tracking various due dates and amounts, making financial management more straightforward.

Omkar's EMI Situation Before and After Consolidation:

After consolidating his debts into a single loan:

By consolidating, Omkar now pays one EMI of ₹8,000 instead of juggling 3 separate payments totalling ₹9,200. This not only eases his financial planning but also reduces the risk of missed payments.

2. Lower Interest Rates

Debt consolidation is a smart way to manage multiple EMIs by combining them into one loan with a lower interest rate. This reduces monthly payments and total interest paid. Let’s see how it helped Puman.

Puman’s EMI Situation Before and After Debt Consolidation

By consolidating his loans at a 10% interest rate, Puman reduced his monthly EMI from ₹14,250 to ₹9,650, saving ₹4,600 monthly. This made managing his finances easier and reduced his overall interest burden.

3. Improved Financial Control

Debt consolidation helps manage EMIs better by giving you more control over your money. Instead of paying many loans with different due dates and interest rates, you can combine them into one loan. This means you only have to remember one payment each month. 

It also helps you avoid missing payments, which can hurt your credit score. By choosing a loan with a lower interest rate, you can save money and pay off your debt faster. This makes it easier to plan your budget and reduces stress.

Here is an example of how debt consolidation can help:

By consolidating his loans, Raman reduced his monthly EMI from ₹9,000 to ₹6,500, saving ₹2,500 each month.

4. Potential For Savings

Debt consolidation can help you save money by combining multiple loans into one with a lower interest rate. This reduces your total monthly EMI and the overall interest paid.

Example: Animesh’s Savings Through Debt Consolidation

Animesh had three loans:

He consolidated these into a single personal loan of ₹3,00,000 at 12% interest for 36 months:

By consolidating, Animesh reduced his monthly EMI from ₹15,000 to ₹9,950, saving ₹5,050 per month. Over 36 months, this amounts to a total saving of ₹1,81,800.

This example illustrates how debt consolidation can lead to significant savings and easier financial management.

5. Better Budgeting

Debt consolidation helps with better budgeting by turning many EMIs into one. This makes it easier to plan and manage money each month.

Example: Lavi’s Monthly Budget Before and After Debt Consolidation

After consolidating his debts, Lavi reduced his total EMIs from ₹15,000 to ₹10,000. This allowed him to increase his savings from ₹2,000 to ₹4,000 and reduce miscellaneous expenses, making his budget more balanced and manageable.

Conclusion

Debt consolidation makes managing loans easier by combining multiple EMIs into one. It lowers interest rates, reduces monthly payments, and helps save money. With just one payment to track, budgeting becomes simpler, and the risk of missing payments decreases. 

This method gives better control over finances, reduces stress, and can even improve savings. Overall, debt consolidation is a smart way to handle debt and achieve financial stability.

FAQs

1. What is debt consolidation?

Debt consolidation combines multiple loans into one, making repayments easier and often cheaper.

2. How does debt consolidation help save money?

It lowers interest rates, reducing monthly EMIs and total interest paid over time.

3. Is debt consolidation good for your credit score?

Yes, it helps avoid missed payments, improving credit health if managed well.

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LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?