FREED's Debt Consolidation Program: Borrowers can save 20-25% on EMI obligations, says CEO | The Financial Express

Borrowers can save 20-25% on EMI obligations with FREED’s Debt Consolidation Program: CEO

Debt Consolidation Program (DCP) launched by FREED has been specifically created for consumers who are over-leveraged with debt.

FREED's Debt Consolidation Program
Know how FREED's Debt Consolidation Program will help borrowers. Representational image

Debt relief platform, FREED, has launched a one of its kind debt consolidation program, MAARG, to provide relief to its consumers and address the toxic debt at a preventive stage. Ahead of the launch of the program on Thursday (January 12, 2023), Ritesh Srivastava, Founder and CEO of FREED, told FE PF Desk about how this debt consolidation program will help end consumers caught in debt traps. Edited excerpts:

What is the debt consolidation program launched by FREED?

The Debt Consolidation Program (DCP) launched by FREED has been specifically created for consumers who are over-leveraged with debt. There are millions of such consumers who are burdened with toxic and high-cost debt and are barely managing their monthly payments, going from one paycheck to another. Unfortunately, they are trapped in this vicious loop of debt and are often one bad news away from a financial mishap that can turn their debt delinquent, causing them financial and emotional stress.

With FREED’s DCP, eligible consumers will be able to consolidate their high-cost debt into one single loan and save a minimum of 20-25% on their EMI obligations, giving them extra cash flow for essential necessities of life. We co-created this product offering in collaboration with an NBFC partner, who believed in FREED’s vision and our unique value proposition of addressing toxic debt at a prevention stage.

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Why are you launching the debt consolidation program?

Since the launch of FREED in August 2020, we have interacted with thousands of consumers who are looking for debt relief in the form of a reduction in their monthly obligation. Due to their high debt-to-income ratio, these consumers often get turned down for new loans by lenders. We identified this gap and worked closely with our lending partners to create a unique loan product that repays the existing credit lines of the consumers by ensuring the utilization of funds for the purposes of consolidation only.

The consolidation loans currently being offered by lenders end up creating a bigger debt trap for borrowers since most of these loans invariably come with a heavy cash-out. FREED is always solving to deliver debt relief to well-intentioned borrowers, DCP is one such manifestation based on deep insights distilled from FREED’s debt resolution product.

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How will the debt consolidation program work?

For eligible consumers looking for debt relief and based on their past utilization of debt and their income and expenses, the sanctioned loan is disbursed in the special purpose account of the lender. Once the loans are consolidated for the borrower, he begins the repayment of the new loan with a single and reduced monthly payment.

Debt Consolidation helps the borrower in many ways by freeing up his cash flow, expediting debt payoff, lowering interest rates and an improvement in credit score as well. FREED’s DCP is intent-centric and data-driven.

Who can benefit from the debt consolidation program?

Debt Consolidation program from FREED is ideal for consumers who are over-leveraged with high-cost debt and are stuck in the minimum payments trap.

How will the debt consolidation program help reduce the EMI burden?

Credit Cards, BNPL loans, App loans, etc. carry very high-interest rates that many unsuspecting borrowers are unaware of. By offering the combined benefit of lower interest rates and extended tenure, we are able to offer a reduced EMI to every borrower. At FREED, our mission is crystal clear – Net Tangible Benefit for every borrower, we ensure that the borrower saves a minimum of 20-25% on his EMI.

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How many users you are expecting for this program?

With the growing consumption of credit through credit card EMIs and BNPL loans, we are already seeing stress building up in personal finances for many millennials and Gen Z borrowers. We are aiming to enrol 10,000 customers (~INR 500 Cr of AUM) this calendar year for our Debt Consolidation program.

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First published on: 12-01-2023 at 12:01 IST