Debt Consolidation Calculator | Best Calculator

Debt Consolidation Calculator

Your Current Debts

Please enter a term between 6 and 360 months
Please enter a rate between 0% and 50%
Please enter a positive amount
Consolidation Results
Total Current Debt: $0.00
Current Monthly Payments: $0.00
Current Payoff Time: 0 months
Current Total Interest: $0.00
Consolidated Monthly Payment: $0.00
Consolidated Payoff Time: 0 months
Consolidated Total Interest: $0.00
Monthly Savings: $0.00
Total Interest Savings: $0.00
Compound Interest Formula:
Monthly Payment = [P × r × (1+r)^n] ÷ [(1+r)^n - 1]
Where:
P = Principal loan amount
r = Monthly interest rate (annual rate ÷ 12)
n = Number of months

Simple Interest Formula:
Monthly Payment = (P + (P × r × t)) ÷ n
Where:
P = Principal loan amount
r = Annual interest rate
t = Loan term in years
n = Number of months
Example (Compound Interest):
For a $10,000 loan at 5% APR for 5 years (60 months):
Monthly rate = 0.05 ÷ 12 = 0.004167
Monthly Payment = [10000 × 0.004167 × (1.004167)^60] ÷ [(1.004167)^60 - 1] = $188.71

Example (Simple Interest):
For a $10,000 loan at 5% APR for 5 years (60 months):
Total Interest = 10000 × 0.05 × 5 = $2,500
Monthly Payment = (10000 + 2500) ÷ 60 = $208.33
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What Is Debt Consolidation?

Debt consolidation is a method of combining multiple debts into one new loan. People usually do this to either lower their interest rate, reduce monthly payments, or make managing debt easier. Instead of juggling several payments each month, you only have to handle one. In the best cases, consolidation helps lower both the interest rate and the overall payment amount.

Understanding the True Cost of a Consolidation Loan

Most loans come with upfront fees, which means the actual cost—called the real APR (Annual Percentage Rate)—can be higher than what lenders advertise. This calculator helps you see the real APR after including any fees, so you can make a more informed comparison between loan offers.

Types of Loans Used for Consolidation

  • Secured Loans: Options like home equity loans, HELOCs (Home Equity Line of Credit), or cash-out refinances are backed by property. Because they are lower risk for lenders, they typically offer lower interest rates.

  • Unsecured Loans: These include personal loans and balance transfer credit cards. They don’t require collateral, but usually come with higher interest rates and lower borrowing limits.

Things to Consider Before Consolidating Debt

1. Pay Attention to Fees

Besides interest, loan fees significantly affect total costs. For example, the calculator shows that with a 5% loan fee, consolidation may save money. But if the fee rises to 15%, consolidation could become more expensive than helpful.

2. It Takes Time

Debt consolidation is not an instant process. It may involve working with a financial advisor or credit counselor to assess your situation and determine the best course of action.

3. Longer Loan Terms May Cost More

Extending the repayment period can lead to more total interest, even with lower monthly payments. However, if the new loan offers a lower true APR, it might still be a better deal. Use the calculator to weigh the pros and cons.

4. Credit Score Effects

Applying for new credit may temporarily lower your score due to a hard inquiry. But consistently paying on time can help it recover. In some cases, paying off credit cards with a personal loan may improve your credit utilization ratio—a factor that can boost your credit score.

Solve the Underlying Issues First

While consolidating your debt might make payments easier or more affordable, it doesn’t solve the core issue. Often, long-term financial health comes from changes in behavior—like spending less, saving more, living within your means, or finding ways to earn more. Creating a solid budget is a great starting point before deciding to consolidate.

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