Personal Loan Settlement vs Debt Consolidation: Which Option Is Right for You?
Borrowing through personal loans, credit cards, and other credit facilities has become common. However, when repayments start becoming difficult, managing outstanding dues can feel overwhelming and stressful. Many individuals then begin searching for practical solutions to regain control of their finances. Two commonly considered options in such situations are personal loan settlement and debt consolidation . According to the Reserve Bank of India (RBI), household debt through personal loans rose by 20.8% in 2023–24, highlighting a sharp increase in unsecured borrowing. In this article, we’ll explore how these two approaches differ and how each can help borrowers move toward financial stability. What Is Personal Loan Settlement? Personal loan settlement is a negotiated agreement between a borrower and a lender. In this process, the borrower requests permission to repay less than the total outstanding amount due to financial hardship. If the lender agrees, the reduce...