Debt Consolidation Calculator
Compare your current monthly debt payments against a new consolidation loan payment to see exactly how much you could save each month. Ideal for evaluating whether refinancing multiple debts into one loan makes financial sense.
About this calculator
Debt consolidation replaces multiple debt payments with a single loan at a new interest rate and fixed term. The new monthly payment is calculated using the standard amortization formula: newPayment = P × (r × (1 + r)^n) / ((1 + r)^n − 1), where P is the consolidated loan principal, r is the monthly interest rate (annualRate / 100 / 12), and n is the loan term in months. Monthly savings = currentPayment − newPayment. A positive result means consolidation reduces your monthly burden. However, a longer loan term can mean more total interest paid even with a lower rate, so comparing total cost—not just monthly payments—is essential. True savings require that the new rate is meaningfully lower than the weighted average rate of your existing debts.
How to use
Suppose your total debt is $15,000 with a current combined monthly payment of $550. You qualify for a consolidation loan at 10% APR over 36 months. Monthly rate r = 10 / 100 / 12 = 0.008333. Compute the new payment: 15,000 × (0.008333 × (1.008333)^36) / ((1.008333)^36 − 1) = 15,000 × (0.008333 × 1.3482) / (1.3482 − 1) = 15,000 × 0.011235 / 0.3482 = 15,000 × 0.032267 ≈ $484. Monthly savings = $550 − $484 = $66. Over 36 months you pay $17,424 total versus your current trajectory—compare that to your existing total payoff cost to confirm net benefit.
Frequently asked questions
When does debt consolidation actually save money compared to keeping separate debts?
Consolidation saves money when the new loan's interest rate is lower than the weighted average rate of your existing debts and when the loan term does not extend significantly beyond your current payoff timeline. If you consolidate high-interest credit card debt at 22% into a personal loan at 10%, the interest savings are substantial. However, stretching a 2-year payoff into a 5-year consolidated loan can erase those savings even at a lower rate because you are paying interest for much longer. Run the full total-interest comparison—not just monthly payment comparison—before committing.
What types of debt can be included in a debt consolidation loan?
Most unsecured debts are eligible for consolidation, including credit card balances, personal loans, medical bills, and some student loans. Secured debts like mortgages and auto loans are generally not consolidated through personal consolidation loans, though separate products like cash-out refinancing serve a similar purpose for home equity. Federal student loans have their own consolidation programs with specific rules about rate calculation. It is important to check whether consolidating federal student loans into a private loan would cause you to lose income-driven repayment options or forgiveness eligibility.
How does debt consolidation affect your credit score?
Applying for a consolidation loan triggers a hard inquiry on your credit report, which can temporarily lower your score by a few points. However, once the loan is used to pay off revolving credit card balances, your credit utilization ratio typically drops sharply, which can meaningfully improve your score. Over time, making consistent on-time payments on the consolidation loan builds positive payment history. The net effect on credit is usually neutral to positive within a few months, provided you do not accumulate new balances on the credit cards you just paid off.