Debt Consolidation Calculator

Compare your current debt situation with a consolidation loan to see if you can save money, reduce monthly payments, and pay off debt faster.

Debt Consolidation Calculator

What is a Debt Consolidation Calculator?

A debt consolidation calculator is a powerful financial tool that helps you determine whether combining multiple debts into a single loan will save you money and simplify your finances. It compares your current debt situation—with multiple payments and varying interest rates—against a potential consolidation loan scenario.

The calculator shows you the differences in monthly payments, total interest paid, and payoff timeline between your current debts and a consolidation loan. This allows you to make an informed decision about whether debt consolidation is the right strategy for your financial situation.

With approximately 26% of consumers in debt having no repayment plan, this calculator provides valuable insights into relief options and helps you understand the true cost of your debt under different scenarios.

How to Use This Calculator

Enter each of your current debts including the debt name, balance, interest rate, and current monthly payment. Click 'Add More Debts' if you have more than three debts.
Input the details of the potential consolidation loan: the interest rate (APR), loan term (in months or years), and any origination fees (typically 1-8% of the loan amount).
Click 'Calculate Savings' to see a comprehensive comparison between your current debt situation and the consolidation scenario.
Review the results showing monthly payment differences, total interest costs, payoff timelines, and potential savings in both money and time.
Use the recommendation to guide your decision, but also consider factors like your credit score, ability to avoid new debt, and whether you can secure a lower interest rate than your current debts.

Key Insights About Debt Consolidation

Debt consolidation typically offers interest rates between 6-20% depending on your credit score, which can be significantly lower than credit card rates that often exceed 18-24%.
A single monthly payment simplifies your finances and reduces the risk of missed payments, which can improve your credit score over time through consistent on-time payments.
Consolidation may not always reduce total interest paid or payoff time—it depends entirely on securing a lower interest rate than your current weighted average rate.
Origination fees (1-8% of loan amount) should be factored into your comparison, as they increase the total amount you need to borrow and can offset some savings.
Balance transfer credit cards with 0% introductory APR (lasting 12-21 months) can be an excellent alternative if you can pay off the debt before the promotional period ends.
Debt consolidation works best when you commit to not accumulating new debt—otherwise, you may end up with both the consolidation loan and new credit card balances.

Understanding Debt Consolidation

Benefits of Debt Consolidation

Simplified repayment: One monthly payment instead of juggling multiple due dates and amounts.
Potential lower interest rates: Consolidation loans often have lower rates than credit cards, especially for borrowers with good credit.
Improved cash flow: Lower monthly payments can free up money for other expenses or savings.
Faster debt payoff: With lower interest rates, more of your payment goes toward principal, potentially reducing your payoff timeline.
Credit score improvement: Consistent on-time payments and lower credit utilization can boost your credit score over time.

Important Considerations

You must qualify for a lower interest rate than your current weighted average to truly save money.
Extending your loan term may lower monthly payments but could increase total interest paid over the life of the loan.
Origination fees and closing costs can add thousands to your loan balance, reducing or eliminating potential savings.
Consolidation doesn't address the root cause of debt—you must change spending habits to avoid accumulating new debt while paying off the consolidation loan.

Alternatives to Consider

Before consolidating, compare with balance transfer credit cards offering 0% APR for 12-21 months, debt management plans through credit counseling agencies, or the debt avalanche/snowball methods. Each option has different benefits depending on your credit score, debt amount, and financial discipline.

Frequently Asked Questions

When is debt consolidation a good idea?

Debt consolidation is beneficial when you can secure an interest rate lower than your current weighted average rate, you have multiple high-interest debts, you struggle to manage multiple payments, and you're committed to not accumulating new debt. It's most effective for borrowers with good to excellent credit scores.

How much can I save with debt consolidation?

Savings vary widely based on your current interest rates, the consolidation loan rate, loan term, and fees. Some borrowers save thousands in interest and hundreds per month in payments, while others may save little or even pay more if they extend the term significantly or don't qualify for a competitive rate.

Will debt consolidation hurt my credit score?

Initially, applying for a consolidation loan may cause a small, temporary dip due to the hard credit inquiry. However, if you make on-time payments and avoid new debt, consolidation can improve your credit score over time by reducing credit utilization and establishing a positive payment history.

What's the difference between debt consolidation and debt settlement?

Debt consolidation combines multiple debts into one loan with the goal of paying the full amount owed, often at a lower interest rate. Debt settlement involves negotiating with creditors to pay less than the full balance, which severely damages your credit score and should only be considered as a last resort.

Can I consolidate all types of debt?

Most unsecured debts can be consolidated, including credit cards, personal loans, medical bills, and some student loans. However, secured debts like mortgages and auto loans typically cannot be included in a personal loan consolidation. Federal student loans have separate consolidation programs.

What if I can't qualify for a consolidation loan?

If you can't qualify due to poor credit or high debt-to-income ratio, consider alternatives like working with a nonprofit credit counseling agency for a debt management plan, using the debt snowball or avalanche method to pay down debts strategically, or exploring balance transfer cards if you have fair credit.

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