Debt Consolidation Calculator — One Loan vs Your Current Debts
Consolidation replaces several debts with one loan: one payment, one rate, one payoff date. It is worth it when the new loan's total cost beats your current best path — and it is a trap when the rate is not actually lower or the paid-off cards get used again.
This tool simulates your current debts month by month at your current payment, then prices the consolidation loan on top. The verdict is the difference between the two total costs.
When consolidation is worth it
When the loan APR is meaningfully below your weighted average rate — typically 4+ points lower — and the term is short enough that total interest falls. A $12,000 pile of 20-25% card debt at an 11% loan APR over 4-5 years is the classic case: the rate cut alone saves more than the fee costs.
It is also worth it for structure: one fixed payment beats juggling four minimums, and a scheduled payoff date removes the open-endedness that keeps card debt alive for years.
When it is a trap
When the offered APR is only slightly below your average — the fee and the longer term can leave total interest higher than just paying the debts down. The tool shows this case directly: if your current path is already cheaper, it says so and tells you how far the rate would need to drop.
And the behavioral trap: consolidation frees up the card lines. If you run them back up while paying the loan, you now owe more total than before, at worse terms. If that is a live risk, the honest answer is a payment increase, not a loan.
How to read the verdict
The savings figure compares the loan's total interest against your debts' total interest under your current best payment path (highest-rate-first). It is the strongest fair comparison available without modeling your future behavior.
Two follow-up checks: does the new payment fit your budget with margin, and will you actually keep the cards unused? Both are yours to answer — the tool handles the rest.
Assumptions
- Current path modeled as avalanche at your stated budget (your best-case current strategy).
- Loan: fixed rate, standard amortization, no origination fee included (add it to the loan APR effect if yours has one).
- No new spending on any instrument.
- Simulation up to 100 months; never means the debts do not clear at the stated budget.
Frequently asked questions
What is a good consolidation loan rate?
One at least ~4 points below your weighted average debt rate, with a term that keeps total interest lower. The calculator shows the exact comparison for your numbers.
Does consolidation lower my credit score?
Short term: a small dip from the hard inquiry, and possibly a shorter average account age. Over the term, lower utilization and on-time installment payments typically push the score up. The net is usually positive.
Should I close the credit cards after consolidating?
Keeping them open (unused) preserves your credit history and available credit; closing them can raise utilization on the remaining balances. The real requirement is behavioral: they must stay unused.
What if the loan APR is higher than one of my debts?
The tool's verdict handles it — if the current path wins, it tells you the rate would need to drop further. A consolidation loan is a rate-arbitrage play; if there is no spread, there is no deal.
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