Compare the monthly cost of your existing debts with a single consolidation loan over the same period, including the new loan's fees.
Use this to test whether rolling credit cards, a car loan or other debts into one personal loan really saves money. Enter the combined balance, a weighted average rate for the existing debts, the consolidation loan's interest rate, the period you want to compare, and the fees for the new loan.
The calculator works out the level monthly repayment needed to clear the same balance over the same period at each rate, then subtracts. Break-even is fees ÷ monthly saving. Net saving is monthly saving × months minus fees.
Worked example (illustrative): $18,000 of debts averaging 19.5% versus a 12% consolidation loan over 4 years with $450 of fees. Clearing $18,000 over 48 months at 19.5% needs about $543 a month; at 12% about $474. The difference is about $69 a month, fees are recovered in about 7 months, and the net saving over 4 years is about $2,860.
To work out a weighted average rate, multiply each balance by its rate, add the results and divide by the total balance. Limits: the comparison only holds if you repay over the same period and close or stop using the old cards. Stretching the new loan over a longer term can lower the repayment while raising total interest. Read debt consolidation loan risks before applying.
Pitfalls, Complaints and Free Help
A worked example of consolidating credit cards and loans into one personal loan, the risks of longer terms, fees, reopened cards and home loan top-ups, and safer alternatives.
