How to Use Our Debt Consolidation Calculator
To get an accurate picture of your potential savings, you’ll need to provide details about your current debts and an estimate for the new loan you’re considering.
Step 1: List Your Current Debts
Add each of your current debts one by one. For each debt (credit card, personal loan, medical bill, etc.), you will need:
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Creditor Name (Optional): This is for your reference (e.g., “Visa Card,” “Car Note”). It helps you keep track but doesn’t affect the calculation.
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Current Balance: The total amount you still owe on that specific debt.
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Interest Rate (APR): The current Annual Percentage Rate for this debt. You can find this on your most recent statement.
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Monthly Payment: The minimum or regular monthly payment you are currently making.
Step 2: Enter Your Potential New Loan Terms
This section estimates the terms of your new, single loan that will pay off all the others.
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New Loan Interest Rate: Enter the interest rate you expect to qualify for. Important: This is an estimate. The actual rate you’re offered will depend on your credit score, income, and overall debt profile. Generally, a credit score above 700 will qualify for more competitive rates.
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New Loan Term (Years): Choose the length of the new loan, typically between 3 and 7 years. A shorter term means higher monthly payments but less interest paid over time. A longer term results in lower monthly payments but costs more in total interest.
Understanding Your Results
The calculator’s output is designed to give you a clear “before and after” snapshot of your financial situation. It moves beyond just a new payment number to show you the true cost and timeline of your debt.
Your Debt Consolidation Summary
This table breaks down the most important figures, allowing you to see the real-world impact of consolidation at a glance.
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Total Monthly Payment: This shows you the immediate effect on your monthly budget. A lower payment can reduce financial stress and free up cash for savings or other goals.
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Debt-Free Date: This reveals whether consolidation will speed up or slow down your journey to becoming debt-free. A fixed-term loan provides a clear finish line, which can be highly motivating.
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Total Interest Paid: This is arguably the most critical number. It represents the true cost of borrowing and is where the most significant savings from consolidation are often found. A lower total interest cost means more of your money stays in your pocket over the long term.
Frequently Asked Questions
Will debt consolidation hurt my credit score?
This is a common concern with a two-part answer:
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Short-Term Impact (Potential Small Dip): When you apply for a new consolidation loan, the lender will perform a “hard inquiry” on your credit, which can cause a temporary dip of a few points. Opening a new loan also lowers the average age of your credit accounts, which can have a minor negative impact.
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Long-Term Impact (Potential Improvement): The long-term effects are often positive. By paying off multiple credit cards, you lower your “credit utilization ratio” (how much of your available credit you’re using), which is a major factor in your score. Making consistent, on-time payments on the new loan will also positively impact your payment history, the most important factor of all.
What is the difference between a debt consolidation loan and debt settlement?
It is crucial to understand this distinction.
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Debt Consolidation: You take out a new loan to pay off your existing debts in full. You still owe the same principal amount, but hopefully at a lower interest rate and with a single payment. Your creditors are paid what they are owed. This is a financial strategy.
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Debt Settlement: A company negotiates with your creditors on your behalf to accept a lump-sum payment that is less than what you owe. This is often a last resort, can be very damaging to your credit score for up to seven years, and any “forgiven” debt may be considered taxable income by the IRS.
Our calculator is for debt consolidation, not debt settlement.
When is debt consolidation a bad idea?
Debt consolidation is not a solution for everyone. It can be a bad idea if:
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It doesn’t solve the root cause: If your debt is from overspending, consolidating won’t fix the underlying habits. Without a budget and change in behavior, you risk running up your old credit cards again, leaving you with the new loan and new debt.
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The new loan terms aren’t better: If you can’t secure a new loan with a lower interest rate, you won’t save money.
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You extend the term too long: A lower monthly payment is tempting, but be careful.
Concrete Example: Imagine you owe $15,000 on credit cards at a 22% APR and have 5 years left to pay it off. You consolidate into a new loan at 11% APR, which seems great. However, you choose a 7-year term to get the lowest possible payment.
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Result: While your monthly payment drops, you’ve added two years to your repayment schedule. You could end up paying more in total interest over the 7 years than you would have in the original 5 years, even at the lower rate. Use the “Total Interest Paid” result from the calculator to spot this trap.
What is a good interest rate for a debt consolidation loan?
Interest rates are highly dependent on your personal credit profile and the current market. As of mid-2025, here’s a general guide:
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Excellent Credit (760+): 7% – 12% APR
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Good Credit (700-759): 12% – 18% APR
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Fair Credit (640-699): 18% – 25% APR
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Poor Credit (Below 640): 25%+ APR (Consolidation may not be beneficial here)
What types of debt can’t be consolidated?
While you can consolidate most common unsecured debts like credit cards, store cards, personal loans, and medical bills, some debts typically cannot be included in a standard personal loan for consolidation:
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Secured Debts: Mortgages and auto loans are “secured” by collateral (your house or car). They have their own refinancing options.
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Federal Student Loans: Consolidating federal student loans with a private loan makes you lose access to federal protections like income-driven repayment plans and loan forgiveness programs. It’s generally not recommended.
Take the Next Step in Your Financial Journey
Now that you’ve analyzed your debt, see how your new potential payment fits into your overall budget with our Debt-to-Income (DTI) Ratio Calculator. If consolidation isn’t the right fit, explore other payoff strategies with our Debt Payoff Calculator (Snowball vs. Avalanche).
