Consolidate Debt Calculator: Will
Consolidating Really Save You Money?

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Help you to see if consolidating your debts will actually save you money, or if the lender is just making it look that way.

This free online Consolidate Debt Calculator will calculate the loan consolidation consequences of combining all of your debts into a single loan payment. But before you use the calculator, please make sure you are fully aware of the debt consolidation pros and cons.

Debt Consolidation Pros and Cons

The Cons

Con #1: If you've ever used a consolidate debt calculator on a lender's website, and the results described a payment decrease as a "savings," then the "Con" you need to be most aware of is ... the lender!

Look, just because combining your debts into a single loan will result in a lower payment, DOES NOT mean you will actually experience a "savings." Why not? Because if the interest rate is higher and/or the repayment term is longer, you will likely end up paying more in interest charges than if you didn't combine your debts into a single loan. You see, it's the total cost (loan fees and interest charges) of the consolidation loan that determines if you will actually save any money, NOT the payment amount.

Con #2: Another potential drawback to consolidating your debts, is that most people I know who have consolidated their debts have done so using a home equity loan (HELOC). What's wrong with that? Well, nothing ... unless it bothers you that you are probably converting mostly non-secured debts into a secured debt.

If you fall behind in your payments on a non-secured debt, about the most that can happen is that you might get harassed by a bill collector. However, if you fall behind on your mortgage payment you could end up living in a homeless shelter. If latter doesn't bother you, then the home equity loan will probably offer the lowest interest rate for your consolidation loan.

Con #3: A third potential drawback to consolidating your debts, is that it lessens the pain of having lived beyond your means. And without that constant painful reminder of the mistakes you've made in the past, you may not have learned a severe enough lesson to keep you from getting into trouble again.

The Pros

Sorry, but I defer to your lender ... because frankly, they have likely covered every conceivable benefit -- and then some. Personally, I always vote for paying off each debt separately, one painful-reminding payment at a time. If you want to actually "save" money while paying off your debts, I suggest using the rollover method instead (Rapid Debt Reduction Calculator).

With that, let's use the consolidate debt calculator to calculate your real debt consolidation loan consequences to see if the lender's definition of "savings" is more than just sales hype.

Calculate Debt Consolidation Loan Consequences
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Instructions: Enter the name, current balance, interest rate and current monthly payment amount for all of the debts you wish to consolidate (up to a maximum of 15 debts).

Next, enter the consolidation loan's interest rate, repayment term, and any associated fees.

Finally, click the "Calculate Consolidation Consequences" button.

Mouse over the blue question marks for a further explanation of each entry field. More in-depth explanations can be found in the glossary of terms located beneath the Consolidate Debt Calculator.

Note: If you include your existing mortgage in the Consolidate Debt Calculator, be sure to enter only the principal & interest portion of your monthly mortgage payment (don't include monthly tax and insurance portion).

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# Entry Columns Calculated Columns
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Debt
#
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Creditor
Name
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Principal
Balance ($)
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Interest
Rate (%)
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Payment
Amount ($)
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Interest
Cost
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# of Pmts
Left
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
  Totals:  
Consolidation Loan Terms
Help Consolidating loan's annual interest rate (%):
Help Consolidating loan's term (number of years):
Help Total of any consolidation loan fees:
Results Without
Consol-
idating
With
Consol-
idating
Diff +/-
Help Total of monthly payment(s):
Help Months until debts are paid off:
Help Total cost:
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Consolidate Debt Calculator Glossary of Terms

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Debt # column: This column just for keeping track of how many debts you have to consolidate.

Creditor Name column: The name of each creditor as you want them to appear on the printed report.

Principal Balance column: The principal balance of each debt. If you have more than fifteen debts I suggest you combine debts with similar interest rates on one line. Also, due to compounding interest, the amount you owe cannot be arrived at by simply multiplying your payment amount by the number of payments remaining. That's because the total of your payments also includes an ever accumulating interest charge. Therefore it's always best to call your lender and ask for the exact amount you owe if you were to pay off the debt now.

Interest Rate column: The annual interest rate of each debt as a percentage (for .06, enter 6%). If a certain debt has more than one interest rate (1 for purchases and 1 for cash advances), enter the higher of the two. When doing any financial planning it's always best to use worse-case scenarios (estimate expenses high and income low).

Payment Amount column: The monthly payment for each debt. If you are including your mortgage in the consolidation loan, be sure to only enter the principal and interest portion of your mortgage payment (leave out the portion for taxes and insurance).

Interest Cost column: Once you have entered valid principal, interest rate and payment amounts in their respective columns, and moved the cursor to the next line (tabbed out of one line to the next), the consolidate debt calculator will calculate how much interest you will pay on each debt between now and when you make the final payment for each. Automatic recalculations of any changes will occur once your cursor moves to another field from the one you made changes to (use the tab key or click to another field using your mouse).

# of Pmts Left column: Once you have entered valid principal, interest rate and payment amounts in their respective columns, and moved the cursor to the next line (tabbed out of one line to the next), the consolidate debt calculator will calculate the number of payments remaining on each debt. Automatic recalculations of any changes will occur once your cursor moves to another field from the one you made changes to (use the tab key or click to another field using your mouse).

Consolidating loan's annual interest rate: The annual interest rate of the debt consolidation loan. Enter as a percentage (for .065, enter 6.5%). The consolidate debt calculator is uses monthly compounding for the consolidation loan.

Consolidating loan's term: The term of the debt consolidation loan in number of years.

Total of any consolidation loan fees: Any fees or costs associated to the debt consolidation loan (closing costs, origination fees, etc.).

Total of monthly payment(s): Total of monthly payments Without consolidation and With consolidation. A plus (+) sign in the Diff +/- column indicates the consolidation loan payment is greater than the total of your current payments. A minus (-) sign indicates the consolidation loan payment is less than the total of your current payments.

Months until debts are paid off: The number of months until debts are paid off Without consolidation and With consolidation. A plus (+) sign in the Diff +/- column indicates the consolidation payoff term is greater than the current payoff term. A minus (-) sign indicates the consolidation payoff term is less than the current payoff term.

Total cost: Total of cost (interest and loan fees) Without consolidation and With consolidation. A plus (+) sign in the Diff +/- column indicates the consolidation loan will cost you more than your current payoff interest charges. A minus (-) sign indicates the consolidation loan will cost you less than your current payoff interest charges.

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