🔗Debt Consolidation Calculator
Compare the cost of your current debts vs a consolidation loan. See if consolidating will save you money and time.
💳 Current Debts
Debt 1
Debt 2
Debt 3
🏦 Consolidation Loan Terms
Frequently Asked Questions
What is debt consolidation and how does it work?
Debt consolidation combines multiple debts into one loan with a single payment. You take out a new loan to pay off all existing debts (credit cards, personal loans, medical bills), then make one monthly payment to the new lender. Benefits: (1) Lower interest rate - consolidation loans typically 6-12% vs credit cards 18-30%. (2) Simplified payments - one payment instead of 5-10. (3) Fixed term - know exactly when you'll be debt-free. (4) Potential credit score boost - lowers credit utilization. Types: Personal loans, balance transfer cards (0% for 12-21 months), home equity loans, 401(k) loans. Best for: Multiple high-interest debts, good credit (660+), stable income. Not magic - you still owe the money!
When does debt consolidation make sense?
Consolidation makes sense when: (1) You can get a lower interest rate than your current average (save thousands). (2) You have multiple debts with different due dates (simplify). (3) Your credit score is good enough to qualify (660+ for best rates). (4) You won't rack up new debt after consolidating (behavioral change required). (5) Total fees are less than interest savings (watch origination fees). BAD idea when: (1) Interest rate isn't significantly lower. (2) Fees eat up all savings. (3) You'll continue spending on credit cards. (4) You're using home equity for unsecured debt (risky). (5) You're close to paying off debt anyway (6-12 months). Run the numbers first - sometimes just paying extra on highest APR card is better.
What are the pros and cons of debt consolidation?
PROS: ✓ Lower interest rate (potentially 6-12% vs 20-30% on cards). ✓ One simple payment (easier to manage). ✓ Fixed payoff date (know when you'll be debt-free). ✓ May improve credit score (lower utilization, on-time payments). ✓ Potentially lower monthly payment (longer term). CONS: ✗ Origination fees (1-5% of loan, typically 3%). ✗ May pay more total interest with longer term. ✗ Requires good credit for best rates. ✗ Temptation to rack up credit card debt again. ✗ May take longer to pay off if you extend the term. ✗ Could lose assets if using secured loan (home equity). Bottom line: Great tool if you're disciplined and get a better rate, dangerous if you treat it as permission to keep overspending.
What credit score do I need for debt consolidation?
Credit score requirements vary by lender: Excellent (750+): 5-7% APR, low/no origination fees, up to $100K loans. Good (700-749): 7-12% APR, 1-3% fees, up to $50K. Fair (650-699): 12-18% APR, 3-5% fees, up to $25K. Poor (600-649): 18-24% APR, 5-8% fees, up to $15K, may need cosigner. Very Poor (below 600): Hard to qualify, rates may not be better than credit cards, consider credit counseling instead. Tip: Check your credit score before applying. If it's below 660, work on improving it first (pay on time for 6 months, pay down balances, dispute errors). Shop around - credit unions often have better rates than banks for members with fair credit.
Should I use a balance transfer card or consolidation loan?
Balance Transfer Card (0% APR for 12-21 months): BEST FOR: Smaller debts ($5K-$15K), excellent credit (750+), can pay off during 0% period. PROS: No interest for intro period, no origination fee (just 3-5% transfer fee), flexible payments. CONS: High APR after intro (18-25%), 3-5% transfer fee, requires discipline. Consolidation Loan: BEST FOR: Larger debts ($15K+), longer payoff needed (3-5 years), good-excellent credit. PROS: Fixed rate/term, predictable payments, lower APR than cards (6-12%). CONS: Origination fee (1-5%), not as low as 0% transfer, less flexible. STRATEGY: Use 0% transfer for amounts you can pay off in 12-18 months. Use loan for larger debts or if credit isn't excellent. Or combine: Transfer what you can to 0% card, consolidate rest with loan.
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Financial Disclaimer
This calculator is provided for educational and informational purposes only. The results are estimates based on the information you provide and should not be considered as financial, legal, or tax advice.
Actual results may vary based on your specific circumstances, market conditions, and other factors. Always consult with qualified financial, legal, and tax professionals before making any financial decisions.
We make no guarantees about the accuracy, completeness, or reliability of the calculations. Use this tool at your own risk.