Yusra3
VIP Contributor
Debt consolidation is a process that involves the collection of debts from multiple lenders, usually with the intent of paying them off in one lump sum. This may sound like a good idea, but it's actually not.
The reason is simple: consolidating your debts will not allow you to save money on interest. In fact, it will likely cost more than if you had just paid off the full amount owed on each loan individually.
That's because most debt consolidation plans involve paying off all of your loans at once but with one monthly payment. That monthly payment covers all of your debts with one company, which means all of their interest rates will be added together into one rate. The resulting total amount that you owe is then multiplied by this new rate and then multiplied again by how long it takes for you to pay off the plan's total balance at once. This means that even though you're only paying interest on one loan at a time instead of two or three, it still costs more than if you were just making separate payments to each lender and saving money on interest payments along the way!
The reason is simple: consolidating your debts will not allow you to save money on interest. In fact, it will likely cost more than if you had just paid off the full amount owed on each loan individually.
That's because most debt consolidation plans involve paying off all of your loans at once but with one monthly payment. That monthly payment covers all of your debts with one company, which means all of their interest rates will be added together into one rate. The resulting total amount that you owe is then multiplied by this new rate and then multiplied again by how long it takes for you to pay off the plan's total balance at once. This means that even though you're only paying interest on one loan at a time instead of two or three, it still costs more than if you were just making separate payments to each lender and saving money on interest payments along the way!
