Debt Consolidation Calculator
Consolidation rolls several balances into one new loan at a single rate and term, trading scattered minimum payments for one predictable bill. This calculator sums your existing debts, estimates the interest you would pay leaving them as they are, then prices a consolidated loan at the rate and term you propose. It contrasts the new monthly payment and lifetime interest against your current path so you can judge whether consolidating actually helps.
Formula
NewPayment = B · r(1+r)^n / ((1+r)^n − 1); InterestSaved = currentInterest − newInterest
- B
- Combined balance of all debts being consolidated
- r
- Monthly rate of the new loan = annual rate ÷ 12 ÷ 100
- n
- New loan term in months = term years × 12
- currentInterest
- Interest from simulating the existing debts at their minimums
How it works
- List each existing debt with its balance, interest rate, and minimum payment. The tool adds the balances into one total and adds the minimums into your current monthly outlay.
- It simulates your current debts month by month — charging interest and applying minimums — to estimate how much interest you would pay if nothing changed.
- It then sizes a single consolidated loan for the total balance at your proposed rate and term using the fixed-payment formula, and reports the new payment, monthly savings, and total interest saved versus staying put.
Worked example
Two debts — $8,000 at 22% ($240 min) and $4,000 at 18% ($120 min) — consolidated into a 9% loan over 3 years.
- Combined balance: 8,000 + 4,000 = $12,000; current minimums total $360/month.
- New loan: $12,000 at 9% over 36 months → payment ≈ $381.60, total interest ≈ $1,737.48.
- Simulating the current debts at their minimums yields about $6,063.77 of interest.
- Interest saved: 6,063.77 − 1,737.48 ≈ $4,326.28, though the monthly payment rises by about $21.60.
Consolidating cuts lifetime interest by roughly $4,326.28 here, even though the monthly payment edges up about $21.60 because the new loan retires the debt much faster.
Frequently asked questions
- Will consolidating always lower my monthly payment?
- Not necessarily. A shorter consolidated term can raise the monthly payment even while it slashes total interest, as in the worked example. The calculator shows both figures so you can see the trade-off between cash flow and total cost.
- How is my current interest estimated?
- The tool simulates each existing debt month by month, charging interest at its rate and applying its minimum payment, until the balances clear. The interest accumulated across that simulation is your current-path cost.
- Does this include balance-transfer or origination fees?
- No. The comparison is based purely on balances, rates, and term. Real consolidation loans may carry origination fees or balance-transfer charges, so subtract those from any projected savings before deciding.
- When does consolidation make the most sense?
- It tends to help most when the new rate is well below your current weighted-average rate and you can keep the term reasonable. If the new rate is similar or the term much longer, you may pay more interest overall despite a lower monthly bill.