Debt Consolidation Calculator - Compare APR, Payments & Interest Savings, Should You Consolidate?
Debt Consolidation Calculator
Debt Repayment Summary
How to Use the Debt Consolidation Calculator
This comprehensive debt consolidation calculator helps you evaluate whether combining multiple debts into a single loan will save you money. Follow these steps:
- Enter Your Current Debts: Input the name, outstanding balance, minimum monthly payment, and APR for each of your existing debts (credit cards, personal loans, etc.)
- Add Consolidation Loan Details: Enter the proposed loan amount, term length, interest rate, and any origination fees
- Compare Results: Review the side-by-side comparison of your current situation versus the consolidation loan
- Analyze the APR: Pay special attention to the effective APR calculation, which includes all fees and gives you the true cost of borrowing
Understanding Your Results
- Effective APR: The true annual cost including all fees, calculated using actual payment schedules
- Net Amount Received: Loan amount minus origination fees - this is what you actually get
- Extra Cash After Payoff: Surplus or shortfall after using loan proceeds to pay existing debts
- Total Interest Cost: Total interest you'll pay over the life of the loan/debts
How to Consolidate Multiple Debts Using a New Loan?
Debt consolidation example
Let’s say you have the following debts:
- Credit card 1 balance: $3,500 at 19.9% interest, with a $120 minimum payment.
- Credit card 2 balance: $5,500 at 20.9% interest, with a $110 minimum payment.
- Credit card 3 balance: $7,500 at 18.9% interest, with a $130 minimum payment.
- Credit card 4 balance: $8,500 at 22.9% interest, with a $150 minimum payment.
Debt Consolidation Loan:
- Loan Amount ($): $30000
- Loan Term: 5 Year
- Interest: 10%
- Loan Fee: 5%
Your current debts carry an effective APR of 20.91%, while the consolidation loan (including fees) has an APR of 12.24%. Overall, the loan’s financing cost is lower, meaning new consolidation loan would save you money in the long run.
With a loan fee of $1500.00, you’ll actually receive $28500.00 to pay off your existing balance of $25000.00. This leaves you with a surplus of $3500.00 after paying off your debts.
| Your Current debts | New Consolidation Loan | |
|---|---|---|
| Effective APR | 20.91% | 12.24% |
| Outstanding Balance / Loan Amount | $25000.00 | $30000.00 |
| Origination Fee / Points | $0 | $1500.00 |
| Net Amount Received | - | 28500.00 |
| Monthly Payment | $510.00 | $637.41 |
| Estimated Payoff Period | 112 months (9 years and 4 months) | 60 months (5 years and 0 months) |
| Extra Cash After Payoff | $0 | $3500.00 |
| Total You’ll Pay | $56829.89 | $38244.68 |
| Total Interest Cost | $31829.89 | $8244.68 |
References
Government Resources
- Federal Trade Commission - Debt Relief Services
- Consumer Financial Protection Bureau - Debt Consolidation Guide
- USA.gov - Managing Debt
- IRS - Interest Deduction Guidelines
Educational Resources
FAQ
When Should I Consider Debt Consolidation?
Consider debt consolidation when you can qualify for a lower interest rate than your current debts, when you want to simplify multiple payments into one, or when you need a structured payoff plan.
Will Debt Consolidation Hurt My Credit Score?
Initially, applying for a new loan may cause a small, temporary dip in your credit score. However, successfully paying off existing debts and making consistent payments on the new loan can improve your credit over time.
What Types of Debt Can Be Consolidated?
Most unsecured debts can be consolidated, including credit card balances, personal loans, medical bills, and some student loans. Secured debts like mortgages and auto loans typically cannot be included.
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