But they don’t tell you that it will now take you six years to pay off the loan.
This may not sound that bad to you at first unless you realize how much more you will actually pay in additional payments.
Debt consolidation seems appealing because there is a lower interest rate on some of the debt and a lower payment.
Myth: Debt consolidation saves interest, and you have one smaller payment.
Truth: Debt consolidation is dangerous because you treat only the symptom.
Debt consolidation is nothing more than a "con" because you think you’ve done something about the debt problem.
The debt is still there, as are the habits that caused it — you just moved it! You can’t get out of a hole by digging out the bottom. Larry Burkett, noted financial author, says debt is not the problem; it is the symptom.
Your monthly payment on the ,000 loan is 7 and 3 on the ,000 loan, for a total payment of ,100 per month.
The debt consolidation company tells you they have been able to lower your payment to $640 per month and your interest rate to 9% by negotiating with your creditors and rolling the loans together into one. Who wouldn't want to pay $460 less per month in payments?