Debt Consolidation Calculator
Compare the cost of your current multiple debts with a single consolidation loan to see if it makes financial sense.
Input Parameters
Results
Is Debt Consolidation Right for You?
Debt consolidation makes sense if the new loan has a lower interest rate and you don't extend the term too much. Be cautious of extending a short-term debt into a long-term loan — it may increase total interest even with a lower rate.
What is the Debt Consolidation Calculator?
The Debt Consolidation Calculator analyzes whether it is mathematically beneficial to take out one massive personal loan to pay off multiple high-interest credit cards. It highlights the potential monthly cash flow savings.
How It Works (Algorithm)
The tool creates two parallel simulations. The first simulation sums up the monthly minimum payments and total interest of all your current individual debts. The second simulation runs a standard amortization schedule on a single consolidation loan. It then compares the total interest paid in both scenarios.
$$ \text{Savings} = \sum (\text{Current Interest}) - \text{Consolidated Interest} $$
Calculates the absolute dollar value of restructuring your debt.
How to Use It
List your current debts (Credit Card 1, Car Loan, Medical Bill) with their balances and interest rates. Then, enter the terms of the new Consolidation Loan the bank offered you. The calculator will explicitly show you how much money and time you will save.