If you have multiple ongoing Equated Monthly Instalments (EMIs) for different loans, it’s natural to feel overwhelmed when trying to manage debt. Each loan will have a different interest rate, a different EMI amount and date, and a different repayment tenure. In addition to this, if you also have more than one credit card, then managing credit card bills may also be adding to this stress. One efficient way to manage debt better is to consolidate it with the help of an instant personal loan.

  • What is debt consolidation and why is it beneficial?

When you take out a single personal loan for the purpose of combining all your current or existing debt, it is called debt consolidation or debt restructuring. After you consolidate your debt by taking a personal loan, you will only have one EMI to pay. This will take off the burden of keeping track of several different EMIs and loan terms and will streamline the process of debt repayment. In addition to convenience and ease, using a personal loan for debt consolidation can also help reduce your overall interest outgo. It is possible to get a better interest rate when you opt for a personal loan to consolidate debt. Even a 0.5% difference could translate to significant savings.

  • How to consolidate your debt using an instant personal loan?
    • 1. Assess the amount you need

You can use a personal loan to consolidate all types of debt such as credit card debt, medical bills, student loans, etc. So, the first thing you need to do is make a list of all your existing debt and the amount outstanding for each. Calculate the total amount you need and then use a personal loan eligibility calculator to see if you are eligible to apply for that amount for an instant personal loan. 

2. Use and EMI Calculator

Once you have assessed the amount you need and checked whether you are eligible for it, make sure to use a personal loan EMI calculator. This tool will help you determine what the EMI amount and loan tenure would be for your personal loan. When consolidating your debt, it’s important to focus on the right repayment tenure and EMI amount. For instance, if you have a lot of high-interest debt, then you may want to opt for a shorter loan term to reduce the amount of interest you have to pay. 

Alternatively, if you are finding it difficult to meet all your EMI dues because your debt-to-income ratio is high, you could opt for a longer repayment tenure so that your monthly EMI amount is lower and more manageable for you to pay. 

3. Apply Online

When applying for a personal loan for debt consolidation with Kotak, you can opt for the personal loan apply online option. The entire application process is digital, and you can get the funds in your bank account without having to leave the comfort of your home.

You simply have to keep documents such as your PAN, Aadhaar, and bank statements of the last three months handy when applying online. Once your application is verified and processed, the loan will be disbursed in a few minutes.

Ending note

Once you have made the decision to consolidate all your debt and manage your finances better, you can confidently click on the personal loan apply button. The best part about using a personal loan for debt consolidation is that there is no need for providing collateral, and you have flexibility in terms of the usage of funds.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.