Combine multiple debts into one low-interest EMI

There are four places in India where a household can consolidate debt, and they do different things. The cash from a personal loan can close any unsecured debt; a card balance transfer can only move card balances; a comparison platform is not a lender at all. Knowing which one you are using tells you what it can and cannot fix.

An illustrative household carries five debts. Three credit cards revolve with balances of ₹1.2 lakh, ₹80,000 and ₹60,000, ₹2.6 lakh in all, at 3.5 percent a month plus 18 percent GST on the interest, which is 4.13 percent a month or 49.6 percent a year. A personal loan has ₹2 lakh outstanding at 16 percent with 30 EMIs of ₹8,132 left. A ₹40,000 pay-later balance is being cleared at ₹10,000 a month, interest-free as long as each instalment is paid on time.

The cards are the problem. This month they charge ₹10,738 of interest and GST, so a 5 percent minimum due of ₹13,000 repays just ₹2,262 of balance. Paying a fixed ₹13,000 a month clears them in 44 months, after ₹3,01,772 of interest and GST. Add the ₹43,972 of interest left on the personal loan and staying put costs ₹3,45,744.

The offer is an illustrative 13 percent over 48 months with a 2 percent processing fee plus GST, deducted at disbursal, and the personal loan's lender charges 4 percent plus GST, ₹9,440, to close it early. Three routes, all illustrative:

Consolidating a loan is cheaper only if three things hold. First, the rate on the cash you actually receive, after the processing fee, is below the old rate. Second, the old loan's foreclosure charge, plus GST, does not wipe out the interest you save. Third, the new tenure is no longer than the months left on the old debt, or the saving survives the extra months. Card balances almost always pass all three, because their rate is so high. Personal loans often fail the second.

Here is the test on a ₹2 lakh personal loan, moved into a 13 percent loan with a 2 percent fee plus GST over the same months it had left.

Credit enquiries come in two kinds. A soft enquiry is when you, or a service acting for you, read your own report; it is visible only to you and does not affect the score. A hard enquiry is when a lender pulls your report to assess an application; it is recorded, and several in a short span read as a borrower hunting for credit. So the order matters: check your report and eligibility first, then apply once. Applying to four lenders in a week to see who says yes puts four hard enquiries on the report at exactly the moment you want to look stable.

The consolidation itself tends to help over time, for a mechanical reason. The household's three cards have limits of ₹1.5 lakh, ₹1.2 lakh and ₹1 lakh, ₹3.7 lakh in all, and ₹2.6 lakh of balances: 70.3 percent utilisation, with the first card at 80.0 percent. Paid off, they report near zero. A new loan adds an account and an EMI, but instalment debt repaid on time is read very differently from cards held near their limit.

No bank is best for loan consolidation in general. The best lender for you is the one that prices your profile lowest after its fees, for a tenure no longer than you need, with an exit charge you can live with. The same lender can be cheap for a salaried borrower with a clean report and expensive for someone with high card utilisation, so a list of lenders ranked by headline rate answers a question you did not ask.

Compare offers on five numbers: the rate, the processing fee plus GST, the tenure, the foreclosure or part-prepayment charge, and the annual percentage rate (APR) in the Key Facts Statement, which folds the fee into one comparable figure. Three offers for the same ₹2.6 lakh of card debt show why the headline rate misleads:

Twenty lakh of debt is rarely one kind of debt, and the first step is to separate what consolidation can take from what it cannot. An illustrative household with ₹1.5 lakh of monthly take-home owes ₹20 lakh: two cards at ₹3 lakh and ₹2 lakh, a bank personal loan of ₹6 lakh at 15 percent with 40 months left, an app loan of ₹3 lakh at 22 percent with 30 months left, ₹50,000 of pay-later, a ₹5 lakh gold loan at 9 percent paying interest only, and a ₹50,000 consumer durable loan with ten ₹5,000 instalments left. Only ₹14.5 lakh of it is consolidable, and the test says less than that should move.

Most consolidations that fail do not fail on the arithmetic. They fail in the year after, when the cards that were paid off start to fill again and the household is now paying an EMI and card interest at the same time. The loan fixed the balance; it did not fix whatever produced the balance.

Unyfy reads your bank and card alerts to list the EMIs and card payments you already make, checks your eligibility with a soft Equifax enquiry, and compares consolidation offers from 15+ banks and NBFCs against each debt you hold. The alerts are bank and card emails and, on Android, transactional SMS, so the list of debts you see comes from your accounts rather than from memory. The eligibility check pulls your Equifax report as a soft enquiry, which does not affect your score, and shows the score and the accounts behind it, including any overdue, settled or written-off account. Only the one lender you choose to apply with runs a hard enquiry.

Each existing loan is then tested against the offer's rate, fee and tenure, the way this page tests the household's personal loan. Where moving a debt costs more than keeping it, it says so, because a processing fee paid to save nothing is still a loss.

Unyfy is not a lender: the lender decides the rate, the amount and whether to approve, and Unyfy earns a commission from the lender on loans taken through it. Consolidation covers unsecured borrowing, such as personal loans and card balances. To start, check your consolidation offer on unyfy.co.in. Install Unyfy on Android, or use the web app at app.unyfy.co.in on an iPhone.