Freedom or a Trap? What Rohan Learned About Consolidating Debt

Rohan Mehta earned ₹52,000 a month. On paper, that’s a decent salary for a 29-year-old working in Pune. But every month, before he could pay rent or buy groceries, ₹31,400 had already left his account, split across four different EMIs.

A credit card bill he’d been rolling over since 2022. A personal loan he took for his sister’s wedding. A consumer durable loan for a laptop. And a two-wheeler loan from the year before that.

Four lenders. Four due dates. Four reminders that his salary was never really his. 

When the Math Stops Making Sense

Rohan wasn’t reckless. Each loan made sense when he took it. But together, they created a pressure he hadn’t planned for.

He started missing due dates not because he didn’t have money, but because he lost track. A missed credit card payment here, a delayed EMI there. His CIBIL score dropped from 731 to 664 in eight months. Lenders started sending notices. One even called his office.

“I wasn’t broke,” he later said. “I just couldn’t keep up.”

Unsecured personal loans and credit card debt accounted for over 51.9% of fresh NPAs in the retail segment.

Rohan didn’t want to become part of that statistic. 

The Question He Googled at Midnight

One night, after getting a late payment SMS, Rohan typed something into Google he’d never searched before: “how to manage multiple loans at once.”

That search led him to consolidating debt, combining all existing loans into a single personal loan with one EMI, one interest rate, and one lender.

It sounded too simple. He assumed there was a catch.

There is a catch. But there’s also a very real solution, if you approach it right.

What Consolidating Debt Actually Means

Debt consolidation is not a bailout. It does not erase what you owe.

What it does is restructure your debt so it’s easier to manage and, in most cases, cheaper to repay. You take a single personal loan large enough to pay off all your existing dues. Then you repay just that one loan in fixed monthly installments.

Here’s what changed for Rohan when he explored this route:

Rohan’s Situation Before Consolidation

Loan Type	Outstanding Amount	Interest Rate	EMI
Credit Card Rollover	₹85,000	36% p.a.	₹8,200
Personal Loan (Wedding)	₹1,20,000	18% p.a.	₹11,400
Consumer Durable Loan	₹42,000	22% p.a.	₹5,800
Two-Wheeler Loan	₹68,000	16% p.a.	₹6,000
Total	₹3,15,000	—	₹31,400/month

After Consolidating Debt (Illustrative)

Loan Type	Amount	Interest Rate	EMI	Tenure
Single Personal Loan	₹3,15,000	14% p.a.	₹21,700	18 months

Monthly savings: ₹9,700 Interest saved over tenure: ~₹28,000 (approximate)

RupeeQ Tip: Before approaching any lender, use the RupeeQ EMI Calculator to model different loan amounts and tenures. Knowing your target EMI upfront gives you real negotiating clarity.

 

The Steps Rohan Followed

Step 1: List Every Debt You Have

Rohan made a spreadsheet. Outstanding balance, interest rate, EMI, due date, everything in one place. It felt uncomfortable to see it all together. But that clarity was the first step.

Don’t estimate. Pull the exact numbers from your loan statements or lender apps.

Step 2: Check Your Credit Score Before Applying

This is where most people make a mistake, they apply for a consolidation loan without knowing their credit score first. Multiple rejections make your score worse.

Rohan checked his score on RupeeQ before applying. His score was 664, not great, but not disqualifying either. That helped him approach NBFCs for Debt Consolidation instead of banks, which have more flexible eligibility criteria.

RupeeQ Tip: Check your free credit score on RupeeQ before starting the process. It takes two minutes and gives you a realistic picture of which lenders are likely to approve you.

Step 3: Calculate the Loan Amount You Need

Add up all your outstanding balances. That total is your target loan amount. Don’t borrow more than you need, the goal is to reduce debt, not extend it.

Rohan needed ₹3,15,000. He applied for exactly that.

Step 4: Compare Lenders, Not Just Rates

Interest rate is important. But also look at:

• Processing fees (some lenders charge up to 3%)
• Prepayment penalties if you want to close the loan early
• Loan tenure flexibility
• Disbursement timeline

A loan at 14% with no prepayment penalty often beats a loan at 13% with a 4% foreclosure fee.

Step 5: Close the Old Loans Immediately After Disbursement

This is critical. Once the consolidation loan is disbursed, close all existing dues on the same day. Get No Objection Certificates (NOCs) from each lender.

Rohan made the mistake of delaying this by a week. One credit card accrued another ₹1,200 in interest. Small, but avoidable.

Step 6: Automate Your Single EMI

Set up an auto-debit for the new EMI. Rohan set it for the 3rd of every month, two days after his salary credit. One payment. Done.

The Traps to Watch Out For

Consolidating debt helped Rohan. But it doesn’t help everyone equally. Watch for these:

• Extending tenure too much: A lower EMI over a longer period often means paying more interest overall. Run the numbers. Loan tenure impacts EMI significantly, the difference between a 12-month and 36-month tenure on the same loan amount can be substantial.
• Not closing old credit lines: Rohan kept his credit card open after consolidation, which is fine for credit score purposes but he nearly used it again within two months. If you can’t resist the temptation, close it.
• Borrowing more than you need: Some lenders will offer you a higher amount. Don’t take it. The point is to reduce debt, not repackage it.
• Ignoring fees: Processing fees, GST on fees, stamp duty, these can add ₹5,000–₹15,000 to your effective cost. Factor them in before you sign.

Did It Work for Rohan?

Eighteen months later, Rohan’s single loan was fully repaid. His CIBIL score had climbed back to 709. He had no active EMIs for the first time in four years.

“The moment I saw one due date instead of four, I felt like I could breathe again,” he said.

That’s the real value of consolidating debt not just the interest savings, but the mental clarity that comes from simplifying a mess you created one reasonable decision at a time.

It doesn’t erase the past. But it gives you a cleaner path forward.

Is Consolidating Debt Right for You?

It works best when:

• You have three or more active loans or credit card dues
• At least one of those carries a high interest rate (above 20%)
• Your credit score is above 650
• You have a stable income to service the new EMI

It may not work if your credit score is very low (below 600), as you may not qualify for a rate that actually saves you money. In that case, focus on improving your score first, something the debt trap to debt control guide walks through in detail.

And if you’re unsure whether consolidation is the right move for your specific situation, the benefits of debt consolidation for salaried borrowers breaks it down by income bracket and loan type.

FAQs

• Does consolidating debt hurt your credit score?

Initially, it may cause a small dip due to a hard inquiry. But over time, consistent repayment of a single loan improves your score.

• Can I consolidate debt with a low CIBIL score?

Yes, but your options narrow. NBFCs are more flexible than banks, though expect a higher interest rate.

• How much can I save by consolidating debt?

It depends on your current interest rates. If you’re paying 24–36% on credit card dues, consolidating at 14–18% can save significantly.

• Should I close my credit card after consolidating?

Not necessarily. Keeping it open but unused can actually help your credit utilization ratio — just don’t start spending on it again.

• How long does a debt consolidation loan take to get approved?

Through most NBFCs and fintech lenders, approval and disbursal typically happens within 24 to 72 hours if your documents are in order.

 

Disclaimer: The names and financial figures used in this article have been modified in accordance with RupeeQ’s policy. Interest rates, processing fees, repayment terms, and eligibility criteria may vary based on the lender, the applicant’s profile, applicable RBI guidelines, and prevailing market conditions. The information provided in this article is intended for general informational purposes only and is subject to change without notice. Please verify the latest terms, conditions, and charges with the relevant lender before applying.