Debt Consolidation Calculator
Debt consolidation with the term effect separated from the rate effect. A lower monthly payment can come from a lower rate or from a longer term, and only the first saves money.
Also called: consolidate debt calculator, debt consolidation loan.
$157,230.24 saved by consolidating at 14% against 32%. The new payment is $18,117.45 against 28,000 now. Payoff moves from 37 months to 48. The consolidated term is longer than your current payoff, so part of the lower payment is stretching rather than saving.
This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.
How this is calculated
Consolidation replaces several debts with one loan at a single rate. The genuine benefit is the rate reduction. The trap is that a lower monthly payment often comes mostly from stretching the term, which reduces the payment and increases the total interest. This shows both the payoff period and the total interest so the two effects are separable. The other risk is behavioural rather than arithmetic: consolidating credit card debt frees up the cards, and re-accumulating on them turns one debt into two.
a lower payment from a longer term is not the same as a lower cost- D
- Debt
- F
- Fee
Method and limits
What it assumes
- Current debts repaid at the stated total payment until cleared.
What it deliberately does not model
- A weighted average rate hides that the highest-rate debt should be attacked first.
- Secured consolidation puts an asset at risk for what was unsecured debt.
- Re-accumulating on the cleared cards is the most common way consolidation fails.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- Is a lower monthly payment a saving?
- Only if it comes from a lower rate. A longer term lowers the payment and raises the total interest, which is the opposite of a saving.
- What is the main risk?
- Re-accumulating on the cards you just cleared. That is behavioural rather than arithmetic, and it is how most consolidations end up worse than the starting position.