For example, Arjun is 40 years old and earns ₹80,000 a month. However, he has ₹2,00,000 in debt from credit cards and loans. Every month, he spends ₹25,000 just on paying his debts, leaving him with little money for savings or investments.
Arjun feels stuck and unsure of how to plan for his retirement.
By using a debt consolidation loan, Arjun could combine his debts into one loan with a lower interest rate. This would reduce his monthly payments, freeing up money to save and invest for his future.
What is passive income?
For example, Rani invests ₹ 1,00,000 in a property and rents it out for ₹ 10,000 per month. She doesn’t have to do much work, but she earns ₹10,000 every month from the rent.
Passive income is money you earn regularly without actively working. For Rani, her rental property generates ₹10,000 every month without her having to work for it daily, which is a great way to build long-term income.
Here are some examples of passive income:
- Dividend Stocks: Making money from stocks that pay regular income each year.
- Real Estate Rentals: Earning money by renting out properties.
- Peer-to-Peer Lending: lending money to others and earning interest.
- Online Businesses: Running a business that operates automatically, like an e-commerce store.
How Debt Consolidation Loans Can Help
For instance, Priya owes ₹ 1,50,000 from credit cards and loans, paying ₹ 20,000 monthly. After taking a debt consolidation loan, she combines her debts into one with a lower interest rate, reducing her payment to ₹15,000. This saves her ₹5,000 each month for saving and investing.
A debt consolidation loan combines all debts into one payment, often at a lower rate. This saves money and allows you to invest in the future.
1. Lower monthly payments and interest rates
For Example: Priya, with ₹2,00,000 debt and ₹25,000 monthly payments, secures a debt consolidation loan. Her payment reduces to ₹18,000, saving ₹7,000 each month for savings or other financial goals.
A debt consolidation loan combines debts into one, lowering interest rates and reducing monthly payments. The money saved can be used for saving or investing in the future.
2. More money for investments
For Example: After consolidating his debts, Arjun saved ₹5,000 every month. He used this money to buy dividend-paying stocks. Over time, these stocks paid him ₹500 each month in dividends.
With extra money from debt consolidation, Arjun invested in stocks, earning regular dividends that grew his wealth over time.
3. Improved Credit Score
For example, Arjun’s credit score was 600, but after managing his debt consolidation loan well, it improved to 750. This higher score helped him get a mortgage at a lower interest rate.
Managing a debt consolidation loan responsibly improves your credit score. A higher score means better loan terms, helping you save money on future investments like real estate.
Examples of Passive Income After Debt Consolidation
After consolidating his debts, Arjun started investing. Here’s how his monthly income grew:
| Investment Type | Monthly Income | Time to Start Earning |
| Real Estate Rentals | ₹15,000 | 5 years |
| Dividend Stocks | ₹4,000 | 2 years |
| Peer-to-Peer Lending | ₹3,500 | 1 year |
Arjun now earns ₹22,500 a month from his passive income without working extra hours. His money is growing, and his future is looking more secure.
Fact:
- A recent report by the bureau indicated that self-monitoring by individual borrowers rose more than 50% in FY24.
Conclusion
Arjun’s story shows how a debt consolidation loan helped him pay off debts, save money, and invest in passive income. By consolidating his debt, Arjun focused on long-term goals like retirement.
Without it, he would still struggle with high-interest debt. Now, with a clear path, Arjun can enjoy a comfortable retirement.
Just like Arjun, you can use a debt consolidation loan to take control of your finances, create passive income, and secure your future.
The earlier you start, the better!