Reduce Your EMIs by Consolidating Your Debt

Let's say you have five different water pots that are all leaking.

You're rushing around attempting to plug each one. It wears you out. You are unable to keep up.

Through debt consolidation, all five pots are combined into a single, bigger pot with a single hole and a manageable stopper.

In terms of money, you replace all of your outstanding credit card debt and loans with a single loan.

This new loan has:

One monthly fixed EMI

Generally speaking, a smaller interest rate than the total of your current debts

One lender to handle

One deadline to keep in mind

The overall amount you owe is still the same. However, repaying it becomes much easier and frequently less expensive.

How Does Debt Consolidation Actually Reduce Your EMI?

Debt consolidation lowers your EMI for two reasons.

Read more: how debt consolidation reduces monthly stress.

Read more: combine loans for an easier payment.

Read more: benefits of debt consolidation.

Examine Your Choices

A Real Example on Before and After Consolidation

Let's consider an actual situation.

Meet 34-year-old Ramesh. paid a salary. Take-home pay every month: ₹45,000.

Before Consolidation

Ramesh's monthly EMI payment of ₹14,500 is around 46% of his wages.

He has five distinct deadlines. five distinct lenders. One tense month after another.

After Consolidation

Ramesh now pays ₹11,100 a month, saving ₹9,800 each month.

Just one EMI. One deadline. Just one lender. and a great deal less worry.

Use the FREED Debt Calculator to Determine Your Savings Enter the loans and EMIs you currently have. Check out how much debt consolidation could save you each month. Free. It takes two minutes. No private information is required.

Not everyone is a good candidate for debt reduction. However, many more individuals than those who utilize it now can benefit from it.

You're a strong contender if

You have two or more outstanding credit card debts or loans.

The total amount of your EMIs exceeds 35–40% of your monthly salary.

You owe more than 20% on at least one high-interest obligation, such as a credit card or personal loan.

Due dates are eluding you because there are too many to keep track of.

Even though you are making money, you worry about money every month.

You qualify for a consolidation loan if your credit score is 650 or above.

Consolidation does not negatively impact your credit score, unlike settlement, therefore you wish to safeguard it.

Consolidation might not be the best option if

Your entire debt is negligible and doable on its own.

Your credit score is below 600, which makes getting a loan challenging.

After consolidating, you'll probably take on more debt, which negates the goal.

A debt resolution program can be more suitable if you are already in serious default.

Are you unsure about which category you fit into? In a single free call, a FREED Expert can tell you precisely that.

Consolidating debt can be beneficial, but only if done correctly.

Before you proceed, bear the following points in mind.

1. Avoid Taking on New Debt

The most frequent error is this one. After consolidating their bills and seeing instant relief, people resume using their credit cards. They return to the same predicament in 12 to 18 months, but this time they now have the consolidation loan on top. Consolidation is only effective if you make a commitment to pay off your existing debt before taking on any new, needless debt.

2. Examine Current Loan Prepayment Penalties

Prepayment or foreclosure fees for certain personal loans and EMI-based products are usually between two and five percent of the total amount owed. Check this cost first if you are paying off an existing loan early in order to consolidate. In certain situations, it can lessen the total savings from consolidation.

3. Examine the Entire Cost, Not Just the EMI

Sometimes a substantially longer tenure is associated with a lower EMI. Additionally, even at a lower rate, a longer tenure may result in a larger total interest payment. Always figure out the entire interest outflow for the duration of the loan, not simply the monthly EMI.

4. Steer clear of predatory lenders

Be cautious if someone offers you an extremely low-interest consolidation loan without verifying your credit or income. Reputable lenders always check your repayment capacity. Generally speaking, offers that seem too good to be true are.

5. Keep Consolidation and Resolution Separate

Your debts are combined into a single, reasonable payment through debt consolidation. When you have the income to pay back the aggregated loan, it works best. You could require a debt resolution or relief program if your debt is so great that even a combined EMI would be too much to handle. Which strategy is best for your numbers can be determined by a FREED Expert.

For the basics, read how loan consolidation works and who it suits best.

This sounds like exactly what I need" is what you should do if you've read this far.

1. Make a list of all your outstanding bills.

List all outstanding credit cards and loans. Add each person's monthly EMI, interest rate, and outstanding balance.

2. Examine your credit rating.

A credit score of 650 or above is required for the majority of consolidation loan alternatives. Use CIBIL or Experian to check yours for free.

3. Determine how much you could save.

To determine how much you might save each month and what your new consolidated EMI would look like, use the FREED Debt Calculator.

4. Consult a FREED Specialist

Consult a FREED Expert before contacting any lender directly. In addition to helping you avoid costly mistakes, we will advise you on which consolidation option best fits your income, credit score, and debt profile, as well as whether debt resolution would be a better fit.

5. Make the appropriate loan application for consolidation

Apply once you've determined which choice is best. FREED can assist you in obtaining the best terms and help you throughout the application procedure.

6. Terminate your current credit cards and loans

Use the consolidation loan right away to pay off all of your outstanding obligations and credit card balances. Don't leave them open.

7. Follow the plan

Just one EMI. One deadline. Configure automatic payment. And promise not to take on any more debt while you settle this.