When Does Debt Consolidation Actually Save Money?
Debt consolidation works best when you can move from a high-rate loan (e.g., 18–20% credit card or personal loan) to a lower-rate product (e.g., 6–10% bank loan or government program). By combining balances into one loan at a lower rate, you pay less interest over time and simplify repayment to a single monthly installment. The savings can be substantial — hundreds of thousands of KRW on typical consumer debt balances.
However, consolidation is not always beneficial. If the new loan has a significantly longer repayment term, total interest may increase even at a lower rate. This calculator shows you the exact comparison: current total interest vs. new total interest, so you can make an informed decision before refinancing. If the savings figure turns negative, consider keeping your current loans or shortening the new loan term.
Frequently Asked Questions
The Loan-on-Loan (loan transfer) program connects high-rate borrowers with lower-rate lenders. The Sunshine Loan and CCRS (CCRS) programs also offer structured debt reduction for eligible applicants.
Opening a new loan temporarily affects your credit score, but paying off multiple accounts and reducing your total debt load typically improves it over time. On-time payments on the consolidated loan are the most important factor.