MONEY · DEBT REPAYMENT
Consolidating: $524 less a month, $2,967 more in the end
Consolidating lowers the payment by lengthening the term. The two figures move in opposite directions, and only the second one shows up at the end. Here are both, side by side.
By the Yoseri News desk · · 5 min read
Three debts, three end dates, three rates. You are offered to buy them out with a single loan at 9% over five years, and the payment drops from $653 to $329. That is $524 more in your month once the extra $200 is counted — the argument is real, and it is powerful when the month is tight.
Let us look at the other figure.
The case
A card at 19.99% ($1,240.60), a car loan at 6.90% ($8,400), a student loan at 5.45% ($6,200). Total capital: $15,840.60. Current payments: $653, plus $200 you can add.
| Payment | Term | Interest | |
|---|---|---|---|
| Consolidation at 9% over 60 months | $329 | 60 months | $3,889 |
| Avalanche, $653 + $200 | $853 | 20 months | $922 |
Consolidation costs $2,967 more in interest, and keeps you in debt forty months longer. And yet it is no scam: at 9%, the rate is lower than your card’s.
Why a lower rate can cost more
Because interest is paid on a balance over a period. Lowering the rate reduces the first factor; lengthening the term increases the second. Going from 20 to 60 months triples the time, and 9% over five years costs more than 20% over twenty months on a small balance.
It is the same mechanism as amortisation: the advertised rate says nothing until you know how long it runs.
When consolidation is still the right call
When the current payment is not sustainable. $853 a month on a budget that frees up $400 does not compare with $329: the first plan does not exist. A plan costing $3,889 in interest that you finish beats a $922 plan you abandon in month four.
When it clears a card and you do not use it again. That is where most consolidations fail: the card balance returns to zero, the limit stays open, and eighteen months later there is the consolidation loan and a card at 19.99%. The debt was not repaid, it was duplicated.
And when it shortens the term instead of lengthening it. A buyout over 24 months rather than 60 changes the whole table — it is the term, not the grouping, that makes the price.
What this calculation assumes
That no fees are added. Origination fees, loan insurance, an early-repayment penalty on the car loan: each is added to the consolidated capital and paid over five years.
That you keep the extra $200 in the avalanche scenario. If you do not have it, redo the table without it — the term lengthens, the gap narrows, and the conclusion may change.
And that this is a loan, not a debt settlement. A settlement is negotiated with creditors and leaves a mark on your credit file; it is a different operation and does not compare here.
And for you, what does that mean?
Write your debts on one line, with their balance, their rate and their payment. Add up the interest you would pay keeping the current rhythm. Compare with payment × term − capital of the offer you are given. Two numbers, one subtraction.
Yoseri’s Debt page costs the three methods on your real lines, with the order of attack dated. It does not choose: the cash-flow constraint is known only to you.
Where the figures come from
The maths in this article starts from the assumptions written above. Run them again with your own figures — you should land on the same numbers.
Yoseri News is an educational publication. Nothing in this article is investment advice, a recommendation to buy or sell, or tax advice. Yoseri is registered as neither an adviser nor a dealer with any market authority.