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Debt consolidation, assessed with the arithmetic shown
The product's benefit is real and its cost is arithmetic. Here is a worked illustration, with every assumption stated, showing exactly where a lower monthly payment gets expensive.
Everything advertised about debt consolidation is true. The monthly payment usually does fall. There usually is one payment instead of several. The rate is frequently lower than the credit-card rate it replaces.
None of that establishes that it costs less, because cost is determined by rate and term together, and consolidation almost always changes both. So let us do the arithmetic properly, with the assumptions on the table.
The illustration and its assumptions
This is a worked example with stated assumptions. It is not an offer, not a quote, and not a prediction of what any reader would be charged.
The two columns
That is the whole product, in one table. The rate did not change. The lender did not change. The only variable is term, and stretching it by two years reduced the monthly payment by about a third while increasing the interest by roughly seventy per cent.
An advert showing “£237 a month” is telling the truth. It is telling you the part that got better.
When consolidation is genuinely the right call
When the rate is materially lower and the term is not materially longer. This is the clean case. Moving revolving credit-card debt at a high rate onto a fixed-term loan at a lower one, over a comparable period, reduces both the payment and the total. If a reader is in this position, the product does what it says.
When revolving debt has no end date. A credit card paid at the minimum can persist for a very long time. Converting it into a fixed-term loan imposes an end date, and that has value beyond the arithmetic.
When missed payments are the actual problem. If juggling five due dates is producing late fees and credit-file damage, a single payment can be worth paying somewhat more for. That is a legitimate trade — it is simply a different trade from the one the marketing describes.
Where it goes wrong
Cleared cards get used again. The documented failure mode. A consolidation loan repays the cards; the cards remain open with full available limits; the balances rebuild. The borrower now has both. Nothing in the product prevents this, and the arithmetic above becomes considerably worse when it happens.
Secured consolidation changes the risk entirely. Consolidating unsecured debt into a loan secured on a home converts a debt that cannot take the house into one that can. That is not a rate decision, and it should never be made on the basis of a monthly payment.
Fees are excluded from headline comparisons and are not excluded from what you pay.
The total cost of credit is disclosed and skipped. Every regulated disclosure regime requires it. It is the number that answers the question, and readers should go to it first.
Pros and cons
Verdict
Our position is that consolidation is neither the trap its critics describe nor the relief its advertising implies. Before taking one, do exactly what we did above: find the total cost of credit for the new loan, compare it against what you would pay continuing as you are, and check whether the term has been extended. If the total is lower, it is a good product. If the total is higher and you are buying breathing room deliberately, that can still be a reasonable decision — as long as you know that is what you bought.
If debt is genuinely unmanageable, free non-commercial debt advice is a better first call than any lender. Nothing here is financial advice.