This would be how you get a bunch of different debts to different places at different rates all rolled down into one payment with one rate.
It makes things easier, but that might be the end of the good news.
Unless this is "for a friend", what you do is weight all current debts first. I'll make it overly easy.
You have two debts, one for $100 at 10% and the other for $200 at 8.5%, okay? Multiply $100 x 10% to get $10. That's the amount of interest you pay in a year. Multiply $200 x 8.5% to get $17. Add up the $10 and the $17 to get $27. Divide $27 into $300 to get 9%. See what I did there?
The 9% result is your Weighted Average Cost of Capital or WACC. It's what it costs you to borrow money.
If the consolidation loan offer is for a penny more than 9%, it's a bad idea. Even for a little bit less it's probably not a great idea. If it's for a lot less, it might be smart. I get into the weeds on that stuff with my customers.
If you're interested, we should talk a bit (for free). I specialize in education and collaboration that includes the professional stuff done without the high cost. And I give customers the same professional tools that are usually limited to the yacht-owner crowd. Let me know!
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