Debt Consolidation - Anyone ever take advantage of this?

[KrazyKid]

@99FRC

Completely agree ^

And something that hasn’t been said yet is this. Yes in interest you are saving $600 year. But what you aren’t realizing is that you are going to end up paying MORE in the long run because you will be longer on the payments you used to have.

For example:

You have $4,000 in CC debt at 24% interest. You have a $20,000 car loan. You could technically pay off the CC in a year and the car loan in 4 years.

If you consolidate those loans, you now have $24,000 you are paying off over a new term, I am going to guess 5-6 years.

So if you paid the credit card off in one year you would pay $960 in interest. Now since you are paying it off over 6 years at lets say 6%, you are now paying $1440 in interest.

Onto the car. If you were to pay the car off in the original 4 year contract at 7%, you will pay $4,600 in interest. Now since you are paying it off over 6 years at 6%, you are paying $7200 in interest.

You WILL end up paying more. Is it easier to pay one bill? Yes. If it worth losing thousands or even hundreds of dollars for? No.

Not to mention this is a very risky move in this job market. You will be using your house as collateral and there are a million things that can go wrong where you could lose everything.

I didn’t really want to do this but I will anyway. it’s not a big deal.

Credit cards:
$4,222 on one @ %9.24 $390.11 a year interest I have 37 payments left to make. So 3 years
$259 on the other @ %24 $62.16 a year interest forget this its paid off this month.

school loan:
$5,965 @ %3.37 $201.02 a year interest. I have 74 payments left to make. So 6 years

car payment:
$11,130 @ 8.99% $1000.58 a year interest I have 34 payments left to make. So 2.8 years

So take the car payment 34 months left and lets use this as the projected time to pay off the above debts. $21317 total If I took that and projected to pay it off in 34 months, I would pay about $3197 in interest @ %5.

If I left it as is, in order I would pay $1170, $1200 & $2801 in the time it would take to pay them off. Total of $5171 in interest over 6 years.