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Consolidation marketing outpaces consolidation arithmetic
One payment instead of five is a real benefit. It is an administrative benefit, and it is routinely sold as a financial one.
Debt consolidation is marketed on a single, genuinely appealing idea: replace several payments with one. That is a real improvement in administration, and for someone juggling five due dates it can be the difference between managing and missing.
What it is not, necessarily, is cheaper. And the marketing does not distinguish between the two.
The substitution being made
Consolidation advertising leads with the monthly payment, because the monthly payment almost always falls. It falls for a reason that has nothing to do with the interest rate: the term is usually longer.
A lower payment over more months can easily mean more total interest, even at a lower rate. Whether it does is arithmetic, and the arithmetic is not on the advert. We work a full example separately, with the assumptions stated.
The three questions that decide it
What is the total cost of credit, not the monthly payment? Every regulated disclosure regime requires this figure precisely because it is the one that answers the question. It is also the one customers skip.
Is the term longer? If so, compare like with like: what would the new rate cost over the old term?
What happens to the accounts being cleared? A consolidation loan that pays off credit cards leaves those cards open with a zero balance and an available limit. Where they are then used again, the borrower has a consolidation loan plus new card debt — the documented failure mode of this product, and the one no advert mentions.
Where it genuinely helps
We would not want to be purely negative, because there are clear cases.
Moving high-rate revolving debt onto a lower-rate fixed-term loan converts an open-ended obligation into one with an end date, and an end date is worth something both financially and otherwise. Where the rate is genuinely lower and the term is not materially longer, the case is straightforward.
The other real benefit is missed-payment risk. One date is easier to meet than five, and the cost of a missed payment — fees, and possibly a credit-file entry — is not trivial.
The framing we would use
Consolidation is a cash-flow and administration tool that is sometimes also cheaper. Sold the other way round, it produces borrowers who feel better and pay more.
Nothing here is financial advice, and this site does not steer readers toward any commercial debt product. Where debt is genuinely unmanageable, free non-commercial debt advice exists in most markets and is a better first call than any lender.