“If the interest rate goes down, it's a win”—Comparing interest based on the consolidated interest rate and monthly repayment amount [Quick Reference Table for Consolidation …

When talking about consolidating debts into one, the phrases “the interest rate will go down” and “monthly repayments will become easier” usually come as a set.

However, these two factors work in opposite directions. If the interest rate goes down, the interest decreases. If you make monthly repayments easier, the repayment period extends, and the interest increases. You cannot tell which effect is greater without comparing the numbers.

In yesterday’s free article, I organized the fact that even if you consolidate 1 million yen from three sources (at 18% APR) into a single loan at 15% APR, if you lower the monthly repayment to 20,000 yen, the interest will be about 260,000 yen more than before consolidation. In this article, I will present a quick reference table that shows the repayment period and total interest based on the consolidated interest rate and monthly repayment amount, compared to the situation before consolidation.

I will show you just one row from the quick reference table first.

When consolidating 1 million yen at 12% APR (Author’s estimate. Before consolidation: 35,000 yen/month, 3 years and 5 months, 317,695 yen in interest)

• 35,000 yen/month: Ends in 2 years and 10 months, 183,540 yen in interest

• 25,000 yen/month: Ends in 4 years and 4 months, 283,433 yen in interest

• 20,000 yen/month: Ends in 5 years and 10 months, 393,187 yen in interest

This row is also lined up for cases of 10% and 15% APR, as well as for consolidating 500,000 yen.

In the paid section that follows, you can read the following:

• A quick reference table showing the number of months until completion and total interest based on the amount consolidated (500,000 or 1 million yen), the consolidated interest rate (10%, 12%, 15% APR), and the monthly repayment amount