Debt consolidation loans allow consumers to transfer the account balances from multiple credit cards or installment loans into a single loan and to make a single monthly payment. For debt consolidation loans to be beneficial, the repayment period for paying off the consolidation loan should be shorter than what it would be for your existing debts without the loan. Secondly, the interest that you pay over the repayment period should be less than what you would pay with your existing repayment terms. In some cases, a debt consolidation loan may look attractive because it has a significantly lower monthly payment than what you are paying today, but it is likely the case that the lower payment is due to extending the repayment of the loan over a much longer repayment period.
Debt Consolidation
Debt Consolidation
Total Debt |
Monthly Payment |
Months to Pay Off |
|---|---|---|
| $ 15,000 | $ 500 | 47 |
Total Debt |
Monthly Payment |
Months to Pay Off |
|---|---|---|
| $ 15,000 | $ 310 | 60 |
Using the calculated payment of the consolidation loan will result in a payoff period of 13 more month(s) than the estimated payoff period for your current debts. Over the repayment term, you will pay $1,917 more in total interest with the consolidation loan.
| Debt Type | Months to Payoff |
|---|---|
| Credit Card Debt | 14 months |
| Installment Debt | 47 months |
| Consolidated Debt | 60 months |