Result
Result reflects the current submitted inputs.
- Risk B
- Reviewed 2026-05-26
- 2 sources
Breakdown
- Current first month interest
- 337.5 USD
- Consolidation term
- 36 months
- All rates, fees, and payments are user-entered; no current lender, issuer, or legal terms are looked up.
- Current debt is simplified to one blended annual rate and one fixed monthly payment.
- The proposed consolidation loan is a fixed-rate, fully amortizing monthly loan.
- Origination fee is added to the new amount financed and not treated as tax or legal APR disclosure.
- Credit score effects, approval odds, balance-transfer rules, prepayment penalties, and behavioral spending changes are excluded.
- This is an educational comparison, not financial advice, legal advice, underwriting, or a debt-relief recommendation.
Accuracy notes
- Risk level
- B
- Reviewed
- 2026-05-26
- Sources
- 2
- Primary result
- Current payoff time
Formula logic is kept in a pure calculator module with fixtures, source notes, and page-visible assumptions.
What the result means
Consolidation helps when the new loan's interest rate is lower than the weighted average of your current debts, and when you do not extend the term so long that the lower payment costs more interest overall. Compare both the monthly payment and the total interest: a smaller payment is not a saving if you pay more in the long run.
Use the result this way
- Start with Current payoff time, then use supporting outputs for context.
- Verify Total debt to consolidate, Current blended annual rate, and Current monthly payment before copying the result.
- Check the formula, example, and assumptions before reusing the answer.
User job
How to use this calculator
Use Debt Consolidation Calculator when you need current payoff time, then use current total interest and consolidation monthly payment to check the context for planning conversations, quote comparisons, payment checks, and scenario review.
Best for
- Comparing one financial scenario with another
- Preparing questions for a lender, advisor, or statement review
- Reviewing a default example before entering your own total debt to consolidate and current blended annual rate.
Check before relying
- Verify rates, fees, timing, taxes, and local rules against official documents before acting.
- All rates, fees, and payments are user-entered; no current lender, issuer, or legal terms are looked up.
- Current debt is simplified to one blended annual rate and one fixed monthly payment.
- Source context: Federal Trade Commission, reviewed 2026-06-16.
Next useful step
- Credit Card Payoff CalculatorUse next when your task shifts from Debt Consolidation Calculator to Credit Card Payoff Calculator.
- Loan CalculatorUse next when your task shifts from Debt Consolidation Calculator to Loan Calculator.
- Amortization CalculatorUse next when your task shifts from Debt Consolidation Calculator to Amortization Calculator.
Formula
Debt consolidation replaces several balances with one new loan. The new monthly payment uses the standard loan payment formula: payment = P x r / (1 - (1 + r)^-n), where P is the total balance, r is the monthly interest rate (annual rate / 12), and n is the number of months. Your savings is the total interest on the old debts minus the total interest on the consolidation loan.
- Consolidation combines multiple balances into one loan with a single payment, ideally at a lower interest rate than the debts it replaces.
- It saves money only if the new rate beats the weighted average rate of your existing debts. Compare total interest, not just the monthly payment.
- A longer loan term lowers the monthly payment but increases total interest; a shorter term does the opposite. Choose the shortest term you can comfortably afford.
- Watch for origination fees, balance-transfer fees, or prepayment penalties, which reduce or erase the savings. Include them when comparing offers.
- Consolidation does not reduce what you owe; it restructures it. Pairing it with a plan to stop adding new debt is what makes it effective.
Inputs
Enter each current debt's balance and interest rate, then the consolidation loan's interest rate and term. The calculator totals your balances, computes the single new payment, and compares the total interest you would pay before and after. A lower rate or a shorter term reduces total interest, while a longer term lowers the monthly payment but can raise total interest.
Example
Suppose you owe $8,000 on a card at 22% and $4,000 on another at 18%. Consolidating the $12,000 into a 5-year loan at 11% gives a monthly payment of about $261 and far less interest than the cards would charge, since the rate drops sharply. Stretching the same loan to 7 years lowers the payment but adds interest overall.
FAQ
How does debt consolidation work?
It combines several debts into a single new loan with one monthly payment, ideally at a lower interest rate. You use the consolidation loan to pay off the old balances, then repay the one loan over a set term.
Will consolidating my debt save money?
It saves money if the consolidation loan's interest rate is lower than the average rate on your current debts and you do not stretch the term too long. Compare total interest before and after, including any fees.
Does debt consolidation lower my monthly payment?
Often yes, because a lower rate or a longer term reduces the payment. But a longer term can mean more total interest, so a lower payment does not always mean a lower overall cost.
What is a good interest rate for a consolidation loan?
A good rate is one clearly below the weighted average rate of the debts you are consolidating. If your cards charge 20% or more, a consolidation loan in the low double digits or single digits can save a lot.
Does debt consolidation hurt your credit?
Opening a new loan can cause a small, temporary dip from the hard inquiry, but paying down balances and making on-time payments usually helps your credit over time. The calculator covers the math, not the credit impact.
Should I consolidate or pay debts off individually?
Consolidate if you can get a meaningfully lower rate and will not run the balances back up. If you can pay the debts off quickly or cannot get a better rate, focusing extra payments on the highest-rate debt may cost less.
Sources
Last reviewed: 2026-05-26
- officialReviewed 2026-06-16Debt Relief or ConsolidationFederal Trade Commission. Consumer guidance on how consolidation works, when it helps, and fees to watch for.
- officialReviewed 2026-06-16What is debt consolidation?Consumer Financial Protection Bureau. Definition of debt consolidation and considerations for comparing rates and terms.
Disclaimer
Results are estimates based on the balances, rates, and terms you enter and a standard amortization. They exclude fees, taxes, and changes in spending. They are not financial advice; consider consulting a qualified advisor before consolidating debt.