Debt Consolidation Calculator
- Updated
- Formula shown
- Free, no sign-up
Results
Consolidating $12,000 costs $413.54 a month; total cost falls by $3,973
| Current debts | Consolidation loan | |
|---|---|---|
| Monthly payment | $380 | $413.54 |
| Time to debt-free | 4 years 8 months | 3 years |
| Total interest | $6,861 | $2,256 |
| Fees | $0.00 | $632 |
| Total paid | $18,861 | $14,888 |
| Debt | Balance | APR | Payment | Paid off in | Interest |
|---|---|---|---|---|---|
| Debt 1 | $6,000 | 24% | $180 | 4 years 8 months | $3,987 |
| Debt 2 | $3,500 | 19% | $110 | 3 years 9 months | $1,407 |
| Debt 3 | $2,500 | 27% | $90.00 | 3 years 9 months | $1,467 |
How to use the debt consolidation calculator
- For each debt, enter the balance, its APR and the monthly payment you make now. Add or remove debts as needed (up to six).
- Enter the rate, term and origination fee of the consolidation loan you have been offered.
- Choose how the fee is paid. If it is taken from the loan, the calculator borrows enough that every debt is still paid off in full; if you pay it up front, it is added to the total cost.
- Compare the monthly payment, the time to be debt-free and, most important, the total paid.
How the comparison works
Loan amount = total balances ÷ (1 − fee %) when the fee is taken from the loan
New payment = L × r ÷ (1 − (1 + r)−n)
Saving = total paid on current debts − total paid on the loan (plus any fee paid in cash)
B and P are each debt's balance and payment, r a monthly rate (APR ÷ 12) and L the loan amount. The current scenario keeps every payment as it is today, so the total falls as each debt is cleared. The APR of the new loan counts the fee as a cost, using the same method lenders use in their disclosures.
Worked example
You owe $6,000 at 24%, $3,500 at 19% and $2,500 at 27%, paying $380 a month in total. At those payments the last debt is gone in 4 years 8 months and you pay $6,861 of interest.
A 3-year consolidation loan at 11% with a 5% fee taken from the loan needs to be $12,632 so that $12,000 reaches your creditors. Its payment is $413.54 a month, a little more than now, but you are debt-free in 3 years and pay $2,256 of interest plus the $632 fee. The total paid falls from $18,861 to $14,888, a saving of $3,973. The loan's APR including the fee is 14.58%.
The term matters as much as the rate
Same three debts, an 11% loan with a 5% fee taken from the loan.
| Loan term | Monthly payment | Total paid | Saving vs now |
|---|---|---|---|
| 2 years | $588.73 | $14,130 | $4,731 |
| 3 years | $413.54 | $14,888 | $3,973 |
| 4 years | $326.47 | $15,671 | $3,190 |
| 5 years | $274.64 | $16,478 | $2,382 |
| 7 years | $216.28 | $18,168 | $693 |
A 7-year loan has the lowest payment by far but saves only $693, because interest runs for years longer. And the rate has to be low enough: over 5 years, the saving at different loan rates is:
| Loan rate | APR with 5% fee | Monthly payment | Saving vs now |
|---|---|---|---|
| 8% | 10.2% | $256.12 | $3,494 |
| 11% | 13.26% | $274.64 | $2,382 |
| 14% | 16.33% | $293.91 | $1,226 |
| 18% | 20.42% | $320.76 | −$385 |
Before you consolidate
- Judge it on total cost. A lower monthly payment can simply mean a longer, more expensive repayment.
- Close the gap that caused the debt. Consolidation frees up credit limits on the cards you paid off. Running them up again leaves you with the loan and new card balances.
- Consider paying the debts down directly. If you can keep paying $380 or more, a focused plan may beat a loan. The credit cards payoff calculator compares the avalanche and snowball methods.
- Check the fees and any balance-transfer offers. Look at origination fees, prepayment terms and, for transfers, the transfer fee and the rate after the promotion. The personal loan calculator shows how fees change the APR.
These are estimates using fixed rates and payments, with interest charged monthly. Your lender's disclosure gives the exact terms.
Frequently asked questions
Does debt consolidation save money?
Only if the new loan’s total cost is lower. Three card balances of $12,000 at 19% to 27%, paid at $380 a month, cost about $6,861 in interest. A 3-year loan at 11% with a 5% fee costs $2,256 of interest plus a $632 fee, saving about $3,973.
Why can a consolidation loan cost more even at a lower rate?
Because a longer term means paying interest for longer, and fees add to the cost. In the same example a 7-year loan at 11% has a payment of only $216.28 but saves just $693, and an 18% loan over 5 years with an 8% fee costs about $1,012 more than keeping the debts.
How is the origination fee handled?
If the fee is taken from the loan, you need to borrow more so the payout still clears every debt: total balances ÷ (1 − fee). To clear $12,000 with a 5% fee you would borrow about $12,632. If you pay the fee in cash instead, it is added to the total cost.
What APR should I compare?
The APR including the fee, compared with the APRs of the debts you are replacing. An 11% loan with a 5% fee over 3 years has an APR of about 14.58%, still well below card rates of 19% to 27%.
Is consolidation better than paying off the debts myself?
Not always. If you can keep up your current payments and target the highest-rate debt first, you may pay little more than with a loan and avoid the fee. Consolidation helps most when the new APR is clearly lower and the term is not much longer.