The calculation
Total debt = the sum of all existing balances being consolidated. Total current EMI = the sum of all existing monthly payments across those debts. The consolidated EMI is calculated as a fresh EMI on the combined total debt, at the new loan's own interest rate and tenure. Monthly EMI savings = total current EMI minus the new consolidated EMI — a positive number means the new arrangement reduces your total monthly outflow; a negative number means it increases it.
A worked example where consolidation increases monthly cost
Three debts totaling ₹5,00,000 with combined current EMIs of ₹15,000/month, consolidated into a single 36-month loan at 12%: the new consolidated EMI comes to about ₹16,607.15 — about ₹1,607.15 MORE per month than the combined current EMIs, not less. This can happen when the existing debts' EMIs reflect shorter remaining terms than the new consolidated loan's chosen tenure, or when the new rate isn't actually lower than the effective blended rate across the existing debts.
A worked example where consolidation genuinely saves money
The identical ₹5,00,000 in debt, consolidated instead into a 60-month loan at 10%: the new consolidated EMI comes to about ₹10,623.52 — about ₹4,376.48 LESS per month than the combined ₹15,000 in current EMIs. The lower monthly payment here comes from BOTH a lower rate and, more significantly, a longer repayment tenure spreading the same principal across more months.
Why a lower EMI isn't automatically a better deal overall
Extending the repayment tenure is the single most powerful lever for reducing a monthly EMI — but a longer tenure on the same principal generally means paying more total interest over the life of the loan, even at an identical or lower interest rate, since interest accrues for a longer period. A consolidation that reduces your monthly EMI by extending the tenure significantly can still cost you more in total interest paid over the full loan term than continuing with the shorter original debts would have.
What to actually check before consolidating
Compare both the monthly EMI change AND the total interest cost over the full loan term (not just the monthly figure) before deciding — a consolidation that lowers your monthly payment but meaningfully increases total interest paid may still be the right choice if monthly cash flow is the pressing constraint, but it's a genuinely different trade-off than a consolidation that reduces both the monthly payment and the total cost, which only happens when the new rate is meaningfully lower than the effective rate on the debts being replaced.