How to Combine Multiple Personal Loans into One Easy EMI

What Is Loan Consolidation?

Loan consolidation means taking a new loan to pay off your existing multiple debts. Instead of managing three or four different EMIs, you’ll now pay a single consolidated EMI to one lender.

It’s a smart financial strategy if you find it difficult to track several repayment schedules, especially when each loan comes with varying interest rates and tenures. By merging them into one personal loan, you make repayment simpler and often more affordable.

For instance, suppose you have three personal loans with interest rates of 13%, 15%, and 17%. By consolidating them into one personal loan at 12%, you can reduce your monthly outflow and even improve your credit score in the long run.

How Personal Loan Consolidation Works

The process is straightforward. You apply for a new personal loan — ideally at a lower interest rate or longer tenure — and use the sanctioned amount to repay all your existing loans. Once the old loans are cleared, you’ll have only one lender to deal with and a single EMI to pay each month.

Here’s a simple step-by-step overview:

1. Evaluate your current loans – Make a list of your ongoing personal loans, credit card debts, and their respective interest rates.
2. Check your credit score – A good CIBIL score (above 700) increases your chances of approval for a low-interest personal loan.
3. Compare lenders – Look for banks or NBFCs offering lower interest rates or special consolidation plans.
4. Apply for a new personal loan – Choose a loan amount sufficient to clear your existing debts.
5. Repay old loans – Use the sanctioned amount to close your outstanding loans.
6. Start a fresh repayment journey – Now, manage one simple EMI each month instead of many.

Benefits of Combining Multiple Personal Loans into One EMI

1. Simplified Financial Management

Managing one EMI is far easier than juggling multiple payment dates and lenders. You’ll avoid missing payments and reduce stress about keeping track of different loan accounts.

2. Lower Interest Rates

By consolidating your debts, you may qualify for a personal loan with a lower interest rate — especially if your credit score has improved since your earlier borrowings. This translates into significant savings over time.

3. Single Lender Convenience

Instead of dealing with different customer portals, emails, and calls, you’ll now have a single lender managing your account, making communication smoother.

4. Better Credit Score Management

Late or missed payments on multiple loans can harm your credit score. A consolidated personal loan with a manageable EMI ensures consistent repayment, gradually improving your credit profile.

5. Opportunity to Extend Loan Tenure

When you combine multiple personal loans into one, you can also choose a longer repayment tenure. While this might slightly increase the overall interest payout, it reduces your monthly EMI burden — a big relief for your monthly budget.

6. Peace of Mind

Financial clarity often leads to mental peace. Instead of worrying about three or four repayment schedules, you’ll have a clear, structured plan — helping you focus on future goals.

When Should You Consider Loan Consolidation?

Consolidating personal loans isn’t always necessary. It works best when:

• You’re paying high interest rates on existing loans.
• You have multiple debts with different tenures and lenders.
• You’re finding it difficult to keep up with repayment schedules.
• Your credit score has improved, making you eligible for a lower-rate personal loan.
• You want to reduce EMI pressure by extending tenure.

If these points sound familiar, loan consolidation can be a powerful move to regain financial control.

How to Check Eligibility for a Personal Loan Consolidation

Before applying, ensure you meet the following personal loan eligibility criteria:

1. Age: 21–60 years (varies by lender)
2. Employment: Salaried or self-employed individuals
3. Income: Minimum ₹25,000/month (depending on city and lender)
4. Credit Score: Minimum 700 or above preferred
5. Repayment History: Strong repayment record on past loans

Your eligibility plays a crucial role in deciding whether you’ll get a low-interest loan for consolidation.

Documents Required for Consolidating Personal Loans

Most lenders ask for the same documents required for any personal loan:

• KYC Documents: Aadhaar card, PAN card, or passport
• Income Proof: Salary slips (for salaried individuals) or ITR (for self-employed)
• Bank Statements: Last 3–6 months
• Existing Loan Details: Sanction letters, account statements, or closure certificates

Having these ready helps speed up approval.

Factors to Consider Before Combining Loans

Before consolidating multiple personal loans into one, take these points into account:

1. Compare Interest Rates Carefully

Ensure that your new personal loan interest rate is lower than the average of your existing ones. If not, you may end up paying more in the long run.

2. Watch Out for Processing Fees

Many lenders charge a 1%–3% processing fee for new loans. Calculate whether the benefits of consolidation outweigh these additional costs.

3. Prepayment or Foreclosure Charges

Check if your current loans have foreclosure penalties. Some banks charge 2%–5% of the outstanding amount for early closure.

4. Impact on Credit Score

Closing multiple loans and opening a new one can temporarily impact your credit score. However, consistent EMI payments will restore it over time.

5. Tenure Selection

Choose a tenure that balances affordability and interest savings. A shorter tenure means less interest but higher EMIs, and vice versa.

Example: How Loan Consolidation Can Save You Money

Let’s say you have:

• Loan A: ₹2,00,000 at 15%
• Loan B: ₹1,50,000 at 16%
• Loan C: ₹1,00,000 at 17%

Your total debt = ₹4,50,000.If you consolidate these into one personal loan at 12%, you could save around ₹1,000–₹1,500 per month in EMIs, depending on tenure — and potentially thousands in total interest across the loan period.

Alternatives to Personal Loan Consolidation

If consolidation doesn’t seem suitable, you can also explore:

1. Balance Transfer Option

Shift your highest-interest loan to another lender offering a lower rate. Many NBFCs and banks allow personal loan balance transfers with minimal processing fees.

2. Top-Up Loan

If your existing lender allows, take a top-up personal loan instead of a new one. It’s quicker, involves less paperwork, and may offer a lower rate.

3. Debt Management Plans

You can also consult a financial advisor or credit counseling agency to create a personalized repayment plan.

Pros and Cons of Loan Consolidation

Tips to Manage Your Consolidated Personal Loan Wisely

1. Automate EMI Payments – Set up auto-debit to never miss a due date.
2. Avoid Taking New Loans – Focus on repaying your consolidated debt first.
3. Track Your Budget – Keep monthly spending under control.
4. Make Prepayments When Possible – Even partial prepayments reduce interest costs.
5. Review Your Credit Report Regularly – Ensure timely updates reflect your repayment record.

Simplify Debt, Strengthen Your Finances

Combining multiple personal loans into one easy EMI is more than just simplifying payments — it’s about taking control of your financial life. With the right approach, you can lower interest costs, protect your credit score, and reduce stress.

If you’re struggling with multiple EMIs or high-interest loans, consider consolidating your personal loans with a trusted lender. Platforms like Fincrif help you explore the best offers from top banks and NBFCs, ensuring you get the most affordable rates and smooth approval experience.

💡 Take the first step today — simplify your finances with one easy EMI through Fincrif.