Debt Consolidation Calculator

What this calculator returns

The calculator compares two paths for the same total debt. The current path keeps the existing debts at the current average rate and monthly payment, projecting how long they take to clear and how much total interest accrues. The consolidation path replaces them with a single new loan at the consolidation rate, with an upfront origination fee added to the loan principal, amortised over the consolidation term. The output is the total cost difference between the two paths: positive when consolidating is cheaper, negative when the new loan plus fee ends up costing more than staying on the existing trajectory.

How the comparison handles the fee

The origination fee is added to the consolidation loan’s principal at month zero. The borrower receives only the original debt amount in cash but signs to repay the principal plus the fee, with interest accruing on the combined figure. The calculator’s consolidation total cost figure therefore captures both the interest charged on the new loan and the implicit cost of the fee: it represents the all-in borrower cost above what was actually received in cash. This basis for comparison aligns the consolidation total cost against the current-path interest figure, because both numbers are then expressed as the cost above the original debt amount.

That framing matters because a financed fee costs more than its face value. On the loaded figures, a 500 fee reduces the saving from 5,638.01 to 5,029.31, a difference of 608.70. The extra 108.70 is four years of interest on the 500 at the consolidation rate. A fee quoted as a flat amount is really that amount plus the interest on it for the life of the loan.

How term length changes the answer

The current path’s term is whatever the existing payment naturally produces, calculated from balance, rate and payment. The consolidation path’s term is set directly by the user. Stretching the consolidation term lowers the monthly payment but raises the total interest paid; shortening the term does the reverse.

On the loaded figures the effect is large enough to reverse the answer on its own. At 48 months the consolidation saves 5,029.31. At 84 months, on exactly the same 10% rate, the saving falls to 513.38. At 120 months it becomes an additional cost of 4,365.01. That is a swing of nearly 9,400 with nothing changed but the term.

The monthly payment moves the other way across the same range. At 48 months the consolidation payment is 646.75, about 53 a month less than the current 700. At 120 months it is 336.98, some 363 a month less. At 36 months it is 822.81, which is 123 a month more than the current payment while saving 6,451.84 in total. Lower monthly and lower total are not the same question, and the two often point in opposite directions.

Why the rate alone is not the answer

Comparing only the rate or only the monthly payment omits the term effect. A 20% rate over 2 years can produce less total interest than a 10% rate over 7 years on the same balance. The calculator runs the full math on both sides, total cash paid, total interest and term length, so the comparison is complete rather than partial. The result panel makes both sides visible separately so the borrower can see what each path produces, not just the headline difference.

Consumer credit rules in many markets require the total cost of credit and a standardised annual rate to be disclosed before an agreement is signed, precisely so two offers can be set against each other on the same basis. The figures to enter here come from that disclosure rather than from a headline rate in an advertisement.

What the calculator does not include

Credit-score effects of opening a new loan and closing existing accounts are outside the scope. So are changes to credit utilisation ratios, the impact of moving unsecured debt to secured borrowing, which changes the consequences of default, and any rate changes on the existing debts that may happen between now and full payoff. Behavioural factors that affect whether the consolidation is actually used as a replacement, rather than new charges accumulating on the cleared accounts, are also not modelled: the calculator answers the cost question only.

The current path also treats the combined debts as a single balance at the weighted-average rate. Actual interest across several debts depends on the order they are paid down, so the current-path figure sits between a highest-rate-first outcome and a lowest-rate-first one rather than matching either exactly. Aggregate credit statistics show how household borrowing moves at a national level, which is the backdrop a single consolidation decision sits against.

When the calculator refuses to run

The current monthly payment must exceed the monthly interest charge on the existing debt at the current rate, otherwise the existing balance does not fall and there is no payoff date to compare against. On the loaded balance and rate that threshold is 375 a month, and the calculator returns an explicit error at or below it rather than producing a misleading figure. The consolidation rate, consolidation term and origination fee must all be valid and non-negative.

A consolidation rate of zero is accepted rather than rejected, since promotional balance-transfer offers are a real case. At zero the consolidation total cost comes out at exactly the fee, 500 on the loaded figures, because there is no interest for the loan to accrue.

Where to look next

The Credit Card Payoff Calculator handles a single balance under a fixed monthly payment, which is useful for modelling the current path on a card-by-card basis rather than as one weighted average. The Balance Transfer Savings Calculator runs the math on moving a balance to a promotional-rate card, which is the zero-rate case of this comparison. The Debt Avalanche Calculator orders several debts by rate, which is the alternative to consolidating them into one.