Debt Consolidation Calculator
Compare multiple debts versus consolidating into a single loan to see potential savings
Evaluate Debt Consolidation
Compare your current multiple debts against consolidating into a single loan. See your potential monthly savings and total interest reduction.
Current Debts
Consolidation Loan Terms
Formula
Monthly Payment = P * r(1+r)^n / ((1+r)^n - 1)
This formula calculates the fixed monthly payment for a loan based on principal (P), monthly interest rate (r), and number of payments (n). Total interest is calculated as (monthly payment × number of payments) - principal.
Frequently Asked Questions
When to Use the Debt Consolidation Calculator
- Managing multiple high-interest debts (credit cards, loans)
- Simplifying monthly payments into one manageable payment
- Reducing total interest paid over time
- Improving credit utilization ratios
- Planning debt payoff strategy
Common Mistakes
- Ignoring consolidation fees: Some loans charge origination or consolidation fees. Factor these into your calculations for true savings.
- Not considering closing old accounts: Paying off credit cards is good, but closing accounts can negatively impact credit scores. Keep accounts open after consolidation.
- Only looking at monthly payments: A lower monthly payment over a longer term may cost more in total interest. Always compare total cost.
- Assuming interest rates stay fixed: Variable-rate consolidation loans may increase over time. Lock in fixed rates when possible.
- Overlooking tax implications: Some debt consolidation may have tax consequences. Consult a tax professional.
Formula Explained
For each debt, the monthly payment is calculated using: M = P * r(1+r)^n / ((1+r)^n - 1)
Total current payments = sum of all individual debt monthly payments. Consolidation payment uses the same formula with your new rate and term.