Debt consolidation calculator
A consolidation loan pays off several debts and leaves one fixed monthly payment, but a lower payment does not always mean a lower total cost.
Enter each debt’s balance, APR and the amount you pay now, then the loan’s rate, term and origination fee, to compare interest, fees and payoff time.
- Formula and assumptions shown
- Table and CSV export
- Runs in your browser
What decides it
- Rate
- Consolidation saves interest when the loan rate is below the weighted rate of the debts it replaces, which is most likely with high-APR credit card balances.
- Term
- A longer loan term lowers the payment but adds months of interest. A loan can cut the payment and still cost more in total.
- Origination fee
- Many personal loans charge a fee of a few percent. When it is deducted from the proceeds, the loan has to be larger to pay every debt in full.
- New balances
- Paid-off cards still have open credit lines. The CFPB notes that consolidation rarely helps if spending keeps adding new debt.
How it works
Current path: each debt is paid at its own fixed payment, with interest at APR ÷ 12 monthly, until paid off. Loan amount = total balances ÷ (1 − fee %) when the fee is deducted, or × (1 + fee %) when added. Loan payment = L × r ÷ (1 − (1 + r)^−n). Saving = current interest − (loan interest + fee).
Assumptions
- Each current debt keeps a fixed monthly payment; freed-up payments are not moved to other debts and no new charges are added.
- The consolidation loan is fixed-rate with equal monthly payments over its full term and pays every entered balance in full.
- Promotional rates, balance transfer fees, late fees and credit score effects are excluded.
Worked example
$15,000 across three debts versus an 11% 48-month loan
The debts are $6,000 at 24% paying $200 a month, $4,000 at 19% paying $120 and $5,000 at 12% paying $170, $490 a month in total. Paid as they are, they cost $5,937.00 in interest and the last one is repaid in 4 years. A loan with a 5% fee deducted from the proceeds has to be $15,789.47; at 11% over 48 months its payment is $408.09, and interest plus the fee comes to $4,588.19. Consolidating saves $1,348.81 and lowers the monthly payment by $81.91.
Step by step
- Run each debt as it is paid now. $6,000 at 24% with $200 a month is repaid in 47 months with $3,254.63 of interest. $4,000 at 19% with $120 a month takes 48 months and $1,731.60. $5,000 at 12% with $170 a month takes 36 months and $950.77.
- Total the current path. $490 a month, $5,937.00 of interest, and debt-free in 48 months, when the slowest debt is repaid.
- Size the loan. With a 5% fee deducted from the proceeds, the loan must be $15,000 ÷ 0.95 = $15,789.47 so that $15,000 reaches the debts. The fee is $789.47.
- Find the loan payment and cost. $15,789.47 at 11% ÷ 12 over 48 months is $408.09 a month. Interest over the term is $3,798.71; adding the fee gives $4,588.19.
- Compare the two. $5,937.00 − $4,588.19 = $1,348.81 saved, and the monthly payment falls by $490 − $408.09 = $81.91. Both paths finish in 48 months.
How to read your result
The headline says whether consolidating saves or costs more in interest and fees, and by how much. The summary gives the payment change and both payoff times. The results list the current and new monthly payments, current total interest, loan interest plus fee, the loan amount including the fee, the fee itself, and both payoff times in months.
The chart plots the combined balance of the current debts against the loan balance month by month, and the table adds each month’s payments. On the current path each debt keeps its own payment and freed-up money is not moved to the others, so once the 12% debt is repaid in month 36 the total payment drops to $320 from month 37. Moving freed-up payments onto the remaining debts, as the debt payoff calculator does, would lower current interest and shrink the saving.
The fee counts as a cost whether it is deducted from the proceeds or added to the balance. Credit score effects, balance transfer offers, promotional rates, late fees, and any new charges on paid-off cards are outside the model, as is paying the loan off early.
What changes the result most
- Loan rate
- At 15% instead of 11% the payment is $439.43, still $50.57 below today’s $490, but consolidating costs $155.78 more in interest and fees.
- Loan term
- A 60-month term lowers the payment to $343.30 but cuts the saving to $338.91 and adds 12 months before the debt is gone.
- Origination fee
- With no fee the loan is $15,000, the payment $387.68, and the saving $2,328.22. With the 5% fee added to the balance instead of deducted, the loan is $15,750, the fee $750, and the saving $1,397.78.
Questions
Is debt consolidation a good idea?
It can lower total interest when the new rate is well below the current rates and the term is not much longer. It does not reduce what you owe, and it can cost more if fees are high or the term is stretched out.
Does debt consolidation hurt your credit?
Applying usually adds a hard inquiry and a new account, which can lower a score briefly. Paying card balances down lowers credit utilization, and on-time payments help over time.
How is the origination fee handled?
Most lenders deduct it from the money you receive, so the loan must be larger to cover every balance. Some add it to the balance. Either way it is part of the cost, and it is counted here.
What about balance transfer cards?
A balance transfer can cost less if the balance is repaid during the promotional period, but transfer fees apply and the rate rises afterward. This calculator models a fixed-rate installment loan only.
Is debt consolidation the same as debt settlement?
No. A consolidation loan repays the debts in full. Debt settlement companies negotiate to pay less than the full balance, often charge fees and can damage credit; the FTC and CFPB both warn about these offers.
What credit score is needed for a debt consolidation loan?
Each lender sets its own requirements, and the rate and fee offered usually depend on credit score, income, and existing debt. Lower scores tend to bring higher APRs or larger fees, which can reverse the result: in the example, a 15% rate instead of 11% turns a $1,348.81 saving into a $155.78 extra cost.
Is a personal loan used for debt consolidation?
Often. A consolidation loan is usually an unsecured personal loan with a fixed rate and term, which is what this calculator models. Other routes include balance transfer cards and home equity loans or lines of credit; home equity borrowing usually carries a lower rate but is secured by the home.
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Sources
These references explain the concepts behind the calculation. They do not endorse this site. Estimates leave out any cost or condition you did not enter.