Debt Consolidation Calculator
Calculate if consolidating your debts into one loan saves money.
Compare total interest, monthly payments, and payoff time before and after consolidation.
Consolidation Savings
Debt consolidation combines multiple debts into a single loan, ideally at a lower interest rate.
The savings come from two factors:
- Lower interest rate — reduces total interest paid
- Structured payoff — a fixed term ensures you pay it off
For each existing debt, total interest is estimated as:
Total Interest = Balance × (Rate/100) × Estimated Years Remaining
For the consolidation loan, the standard amortization formula is used:
M = P × [r(1+r)^n] / [(1+r)^n - 1]
Where:
- P = Total combined balance
- r = Monthly interest rate (new rate / 12)
- n = New loan term in months
Example: Three debts totaling $25,000 at an average 18% rate, consolidated into a 5-year loan at 8%:
- Old monthly total: ~$750
- New monthly payment: ~$507
- Interest saved: thousands of dollars over the loan term
Tips:
- Consolidation only helps if the new rate is lower than your average rate
- Watch out for origination fees — they can reduce your savings
- Avoid running up new debt after consolidating