Compare a consolidation quote with your current debts
A consolidation loan replaces several debts with one. It can lower your monthly outlay, simplify your payments or lower your rate, but the only way to know whether it saves money is to compare what you would actually pay either way. Enter each debt with its balance, rate and monthly payment, then the loan quote: amount, rate, term and fee. The calculator builds the month-by-month schedule for the current debts and for the loan and compares them on payment, payoff time, interest, fees and total cash paid.
The default example has three cards totalling 24,000.00 and a 25,000.00 loan at 10.99% over 60 months with a 5% fee. The loan payment is 543.44, against 630.00 a month now. Whether that is a good deal depends on the rest of this page.
How fees and loan proceeds change the result
A fee changes how much of the loan actually reaches your debts. There are three common ways to pay it. A deducted fee comes out of the loan before you receive it, so a 12,000.00 loan with a 5% fee delivers 11,400.00 and leaves a 600.00 shortfall that you must find elsewhere. A fee paid in cash up front leaves the whole loan for your debts but costs you cash on day one. A financed fee is added to the loan, so you borrow more and pay interest on the fee.
The "set loan to clear debts" button works out the loan amount that covers your debts under the fee method you chose. For a deducted 5% fee on 12,000.00 of debts it is 12,631.58, because 5% of that amount is taken off and 12,000.00 remains. For a financed fee of 5% on the debts it is 12,600.00, with a payment of 1,050.00 over 12 months at 0%. In the default example, 1,250.00 of the 25,000.00 loan goes to the fee, 23,750.00 reaches the debts and 250.00 is left to pay in cash; you confirm that with the shortfall checkbox. Ask the lender which fee method applies before you compare quotes, because the same percentage costs different amounts under each. A flat fee works the same way when you enter it as an amount instead of a percentage.
A lower payment can cost more overall
The easiest number to compare is the monthly payment, and it is the least reliable. Take one 10,000.00 debt at 10% paid at 400.00 a month. Consolidating it into a 10-year loan at the same 10% cuts the payment to 132.15, yet the loan costs 4,597.70 more in total because you pay interest for far longer. The calculator therefore reports the total cash paid and the difference in finance cost, which is interest plus fees, and never treats a lower payment or a lower rate as a saving by itself.
If the loan proceeds exceed your debts, the extra money is new borrowing, so the page withholds its savings verdict and shows the finance costs separately until you lower the amount. It does the same when a current debt cannot be repaid at its payment, and when an equal-budget comparison does not hold. Ask for the total of all payments and the payoff date before you decide.
Compare the same monthly budget
Comparing a 543.44 payment with the 630.00 you pay now is not fair if you could pay the loan faster. The second baseline holds your monthly budget fixed at the sum of your current payments. As each debt is paid off, the money it freed goes to the debt with the highest rate, and the loan is paid at the same budget instead of its scheduled payment. On the default example, keeping the budget of 630.00 clears the current debts in 59 months, and the loan in 50, against 60 at the scheduled payment.
If your budget is lower than the loan's scheduled payment, the comparison is not equal and the page says so. If you choose a baseline in which each debt keeps its own payment, the payments fall as debts finish, which is how most people actually repay, and the schedule shows it. In practice most people keep paying what they paid before, so this view often shows the realistic saving. You can also enter a higher budget to see how extra money speeds up the payoff.
Formula and worked fee examples
For each debt, each month: interest = opening balance × annual rate ÷ 12, payment = the smaller of the planned payment and the balance plus interest, and closing balance = opening + interest − payment. For the loan of amount L at monthly rate r over n months, the payment is L × r ÷ (1 − (1 + r)⁻ⁿ), or L ÷ n at 0%. The fee is counted once: as interest-bearing principal if financed, as reduced proceeds if deducted, or as cash if paid up front.
Two checks show the logic. A 10,000.00 debt at 12% with a 12-month loan at 12% and no fee has the same cost either way: the scheduled loan payment is 888.49 and the two plans differ by about 0.00 because of rounding the payment you entered. At 0%, 12,000.00 repaid over 12 months is 1,000.00 a month, and a financed 5% fee turns that into a 12,600.00 loan, a 1,050.00 payment and 600.00 of finance cost. The calculator also shows a fee-adjusted rate for the loan, found from the net proceeds and the payments, and a balance-weighted average rate for your current debts. Neither is a statutory annual percentage rate. Rounding is for display only, so the totals can differ from a lender's statement by a few cents.
Assumptions and limits
This compares schedules from the figures you enter. It does not model new borrowing, payments that fall as balances fall, promotional rates that end, late fees, taxes or credit scores, and it does not tell you whether you would be approved or at what rate. If a debt's payment only covers its interest, as with 100.00 a month on a 10,000.00 balance at 12%, it is not repaid under the current-payments baseline and no payoff date is invented. Horizons beyond 100 years are cut off with a message rather than hidden.
Because every figure is one you enter, the result is only as good as the inputs. Use the balances and rates on your latest statements instead of estimates, and enter the payment you actually make rather than the minimum shown on an old bill. Run the comparison once for each way the fee can be paid, because the method changes both the cash you need on day one and the interest you pay afterwards.
Debt consolidation questions
Does a lower payment mean I save money?
No. A lower payment can come from a longer term, which adds interest. Look at the total cash paid and at the interest and fees together, as the comparison shows. Check the payoff date and the total cash paid as well.
How are origination fees included?
As a deducted fee, a cash fee paid up front, or a financed fee added to the loan. The percentage is taken on the loan amount, except for a financed fee, which is taken on the debts being replaced. The fee is counted once in the comparison.
What if the loan does not cover all my debts?
The page shows the shortfall, and you must confirm that you will pay it in cash. An unfunded shortfall is never treated as paid.
Can I compare without taking a new loan?
Yes. If you only want to see which of your debts to pay first, compare avalanche and snowball payoff plans, or compare a personal consolidation loan with a balance transfer. For a single card, see how fixed and minimum payments differ, and for one loan calculate its payment and schedule.
Will consolidation improve my credit score?
This calculator does not model credit scores and cannot say. It compares the cash flows you enter, nothing more. Opening or closing accounts can change a score in ways that depend on your history, so ask a lender or a credit counsellor rather than relying on a calculator.