Debt Consolidation Calculator
If you’re working on a plan to pay off a large amount of debt, you’re probably considering a debt consolidation loan. But is a debt consolidation loan right for you?
A debt consolidation loan can help you save money on interest and make your monthly payments more manageable.
It’s important to run the numbers to make sure this type of loan is best suited for your situation. Our debt consolidation calculator can help you do just that.
- Loan Amount: Put in your loan Amount from all cards, including interest you owe.
- Interest Rate: Plug in your estimated debt consolidation interest rate.
- Monthly Payment: Add your estimated payment amount.
Current Debt
Consolidated Loan
Monthly Payment:
$ 0
$ 0
Debt-free Time:
0 Months
0 Months
Principal Paid:
$ 0
$ 0
Interest Paid:
$ 0
$ 0
Total amount to be paid:
$ 0
$ 0
Total Interest(APR)
0 %
0 %
on Interest:
How to Use the Debt Consolidation Loan Calculator
A debt consolidation calculator is a tool designed to help you determine if consolidating your debts into a single loan is a financially sound decision.
It works by comparing your current debt situation with the proposed consolidation plan, considering factors such as interest rates, loan terms, and monthly payments.
Step 1: Gather your current debt information:
To use a debt consolidation calculator, you’ll need information about your current debts, such as the principal balance, interest rates, and remaining loan terms. This information will be used to calculate your current monthly payments and total interest paid over the remaining loan terms.
Step 2: Input your current debt information:
Enter the details of your existing debts into the calculator, including loan balances, interest rates, and remaining terms.
Step 3: Enter proposed consolidation loan details:
Input the proposed interest rate and term of the consolidation loan. This information can be obtained from potential lenders or by researching average rates for debt consolidation loans.
Step 4: Calculate and compare:
The calculator will process the information and provide you with the following:
- Current monthly payment: The total monthly payment for all your existing debts.
- Current total interest: The total interest you’ll pay over the remaining terms of your current debts.
- Consolidated monthly payment: The new monthly payment for the consolidated loan.
- Consolidated total interest: The total interest you’ll pay over the term of the consolidated loan.
Step 5: Evaluate the results:
Compare the current and consolidated payments and interest costs. If the consolidated loan results in a lower monthly payment and/or reduced total interest paid, debt consolidation may be a good option for you. However, keep in mind that extending the loan term can result in lower monthly payments but might increase the total interest paid over time.
A debt consolidation calculator is a helpful starting point to determine if consolidation is right for you.
Still, it’s essential to consider other factors such as loan fees, the impact on your credit score, and your ability to maintain discipline in paying off the consolidated loan.
Always consult with a financial advisor or credit counselor for personalized advice before making a decision.
How the APR, Amount of Loan, and Payback Period Determine Monthly Payment
There are several key factors that determine how much you’ll pay on your debt consolidation loan each month. Here’s what determines that payment:
Loan Amount
Your loan amount is one of the most important factors that impact your loan payment. The more money you borrow, the higher your monthly payment will be each month.
Interest Rate
Your interest rate is the amount you pay to borrow the money. The higher your interest rate, the more you’ll pay for your loan. The good news is that personal loans usually have fixed interest rates, meaning they won’t increase during your loan term.
Payback Period
The final factor that affects your loan payment is your loan term or payback period. The longer you take to pay off your loan, the lower the amount you’ll pay each month.
Keep in mind that a longer loan term also typically means paying more in interest over the life of the loan.
How to Shop for a Debt Consolidation Loan
With so many debt consolidation loans on the market, it can be challenging to decide which is right for you. Here are some factors to consider when shopping for a debt consolidation loan.
APR
The interest rate you’ll get depends partially on your lender. One lender might charge you twice as much in interest, which can cost you hundreds or thousands of dollars over the life of your loan. You can find the best rate by shopping around with several different lenders and getting prequalified or preapproved.
Maximum Loan Amount
It’s important to consider the amount you need to borrow when shopping for a personal loan.
Some lenders offer debt consolidation loans as large as $100,000, while others might have maximum loan amounts of just $20,000. The amount you need to borrow can help you narrow down your list of potential lenders.
Loan Terms
A loan term is the number of months or years over which you must pay it back. Debt consolidation loan terms often range from one year to five or six years.
If you have a limited monthly budget, you may need a longer loan term, so make sure to choose a lender that offers one.
Fees
When you take out a personal loan for debt consolidation, it can come with expensive fees such as origination fees, application fees, late fees, and prepayment fees.
These fees can add up and make the loan more costly overall. In fact, according to a recent study, the average origination fee for a personal loan is around 5% of the loan amount.
It’s important to do your research and compare different lenders before committing to a loan.
Some lenders now offer loans with no fees, which can save you money in the long run. However, it’s important to also consider other factors such as interest rates and repayment terms when making your decision.
Frequently Asked Questions
You can use a personal loan for any purpose. Some of the most common reasons people borrow personal loans are for debt consolidation, emergency expenses, and major purchases.
The credit score needed for a personal loan depends entirely on the lender. Some lenders offer personal loans to borrowers with credit scores in the 500s, while others require scores in the 700s.
There’s not necessarily a minimum amount of debt you need to get a debt consolidation loan. However, run the numbers to ensure the amount you’ll save on interest exceeds the cost of consolidating your debt.
A personal loan can hurt your credit score when you first get it since the hard inquiry and new account will appear on your credit report. But as long as you make your monthly payments on time, a personal loan can improve your credit over time.
While an installment loan comes with a set payoff date when you’ll be finished paying off the loan, you can always pay it off early. Just make sure you avoid personal loans that charge prepayment penalties.
