Debt Consolidation Calculator (Is a Consolidation Loan Worth It?)
Enter your total debts, their average rate and payment, and the consolidation loan’s terms.
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Debt Consolidation Calculator (Is a Consolidation Loan Worth It?) by TheCalcTools
How the Debt Consolidation Calculator (Is a Consolidation Loan Worth It?) works
Without consolidating, the debts are paid off at your current payment; the months and interest come from the loan payoff formula. The consolidation loan adds its fee to the balance and is repaid over its term.
Consolidation helps only if the new rate and fees are lower overall and you stop adding to the old cards. A longer term can lower the payment but raise the total interest.
The formula
Worked example
Using the default values shown in the calculator:
| Total balance of the debts | $18000 |
|---|---|
| Average interest rate on current debts | 22 % |
| What you pay each month now | $550 |
| Consolidation loan rate | 12 % |
| Consolidation loan term (months) | 48 |
| Loan fee (added to the loan) | 3 % |
- 18,000 at 22% paid at 550 a month takes 51 months and costs $9,739.94 in interest.
- A 48-month loan at 12% with a 3% fee costs $488.23 a month and $5,435.01: Consolidation saves money.
Result:
| New monthly payment | $488.23 |
|---|---|
| Interest and fees if you keep the current debts | $9,739.94 |
| Interest and fees with the consolidation loan | $5,435.01 |
| Savings with consolidation | $4,304.93 |
| Months to debt-free now | 51 |
| Verdict | Consolidation saves money |
Frequently asked questions
Does consolidation hurt my credit score?
A new application causes a small, temporary dip, but paying cards down can lower your utilisation and help over time.
Sources and further reading
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This calculator gives estimates for information only. It is not financial advice, and your lender's or provider's figures will govern. Rates, fees and rules vary. See our disclaimer.