Debt consolidation combines multiple debts into a single loan, potentially lowering your monthly payment and simplifying your finances. This calculator estimates your new payment, total interest savings, and payoff timeline. It’s designed for individuals with credit card debt, personal loans, or other high-interest obligations.
Debt Consolidation Calculator
Estimate your new monthly payment and potential savings
Current Debts
Enter up to 5 debts. Leave unused rows blank.
Consolidation Loan
Enter your details and click Calculate to see results.
How to Use This Tool
- List each of your current debts, including the outstanding balance, annual interest rate, and current monthly payment.
- Enter the interest rate, term (in years), and any origination fee for the consolidation loan you're considering.
- Click "Calculate" to see a comparison of your current situation versus the consolidated loan.
- Review the results, including monthly payment changes, total interest costs, and payoff timelines.
- Use the "Reset" button to clear all inputs and start over.
Formula and Logic
For each current debt, the calculator simulates month-by-month payments until the debt is paid off, accounting for monthly compounding interest. It sums the total interest paid across all debts and determines the maximum payoff period (since debts are paid in parallel).
The consolidation loan monthly payment is calculated using the standard loan amortization formula: PMT = P * [r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount (total current balances plus any financed fees), r is the monthly interest rate, and n is the total number of payments (term in months).
Total interest for the consolidation loan is the total payments minus the original debt balance (excluding fees). The origination fee is shown separately but is included in the loan amount if financed.
The comparison shows both monthly cash flow impact and long-term cost.
Practical Notes
Interest rates significantly affect total cost. A lower rate can save thousands, but extending the term may increase total interest even with a lower rate.
Consolidation loans often have origination fees (typically 1-8% of the loan amount). Factor these into your decision.
Consider tax implications: personal loan interest is usually not tax-deductible, but if you're consolidating qualified student loans or home equity, interest may be deductible. Consult a tax advisor.
Avoid accumulating new debt after consolidation. Otherwise, you may end up with both the consolidation payment and new credit card balances.
Use this tool to model different scenarios: a shorter term builds equity faster but higher payments; a longer term lowers payments but costs more over time.
Check your credit score before applying. Better scores qualify for lower rates.
Why This Tool Is Useful
Provides a clear, side-by-side comparison of your current debt situation versus a consolidated loan.
Helps you understand the trade-offs between monthly payment reduction and total interest cost.
Allows you to experiment with different loan terms and rates to find the most affordable option.
Highlights potential savings and the true cost of consolidation, including fees.
Empowers you to make an informed decision about managing your debt.
Frequently Asked Questions
Will consolidating my debt hurt my credit score?
Applying for a consolidation loan typically causes a hard inquiry, which may lower your score by a few points. However, paying off credit cards can improve your credit utilization ratio, which often boosts your score over time. The overall impact depends on your credit profile.
Should I choose a shorter or longer loan term?
A shorter term (e.g., 3 years) means higher monthly payments but less total interest and faster debt freedom. A longer term (e.g., 7 years) lowers your monthly payment but increases total interest paid. Choose based on your cash flow needs and long-term goals.
Can I consolidate student loans with a personal loan?
Yes, you can use a personal loan to pay off student loans, but you may lose federal benefits like income-driven repayment plans, deferment, and forgiveness. Compare the terms carefully and consider federal consolidation options first if you have federal student loans.
Additional Guidance
Before applying, get pre-qualification quotes from multiple lenders to compare rates without hard inquiries.
Read the fine print for prepayment penalties. Some loans charge fees for early repayment.
Create a budget that includes the new consolidation payment and stick to it to avoid falling back into debt.
If you have high-interest credit card debt, a balance transfer credit card with 0% intro APR might be an alternative to a consolidation loan, but watch for transfer fees and the post-intro rate.
Consider consulting a non-profit credit counselor if you're struggling with debt. They can provide free or low-cost advice and may help negotiate with creditors.