Loan Consolidation Calculator

Compare your current loan payments with a consolidated loan to see if combining your debts will save you money each month and over the life of the loans.

Current Loans

Loan 1
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Loan 2
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Loan 3
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Consolidation Offer

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yrs

Enter your current loans and the consolidation offer, then click "Calculate" to compare.

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Pro Tip

Compare the total interest paid, not just the monthly payment. A lower monthly payment with a longer term can cost you thousands more in interest. Use the debt avalanche method to pay off high-interest debt fastest.

Try the Debt Avalanche Calculator →

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Understanding Loan Consolidation

Loan consolidation combines multiple debts into a single loan with one monthly payment. The goal is typically to secure a lower interest rate, reduce your monthly payment, simplify your finances, or achieve some combination of these benefits.

Consolidation works best when you can get a significantly lower interest rate than your current weighted average rate. This is most common with high-interest credit card debt, which can often be consolidated into a personal loan or home equity loan at a much lower rate.

However, consolidation is not always beneficial. Extending the repayment term to get lower payments can mean paying more total interest over time. Also, consolidating unsecured debt (like credit cards) into a secured loan (like a home equity loan) puts your home at risk.

Before consolidating, compare both the monthly payment and the total interest cost. A lower monthly payment is not always better if it comes at the expense of significantly more total interest.

Weighted Average Interest Rate

Weighted Rate = Σ(Balancei × Ratei) / Total Balance

Where:

Balance_i = Balance of each individual loan

Rate_i = Interest rate of each individual loan

Total Balance = Sum of all loan balances

Example

Three loans: $8,000 at 19.9%, $5,000 at 15.5%, $12,000 at 6.8%:

  • • Weighted: ($8,000 x 19.9% + $5,000 x 15.5% + $12,000 x 6.8%) / $25,000
  • • = ($1,592 + $775 + $816) / $25,000 = 12.73%
  • • If consolidated at 9% for 5 years: $518.96/month
  • • Compared to current $600/month = $81.04/month savings

Frequently Asked Questions

When does loan consolidation make sense?
Consolidation makes sense when you can get a lower interest rate than your current weighted average, when simplifying payments will help you stay on track, or when you need to reduce your monthly payment to avoid missing payments.
Will consolidation hurt my credit score?
Initially, a hard inquiry and new account may slightly lower your score. However, over time, consolidation can improve your score by reducing credit utilization and helping you make consistent on-time payments.
Should I consolidate into a secured or unsecured loan?
Secured loans (backed by collateral like your home) offer lower rates but put your assets at risk. Unsecured personal loans have higher rates but no collateral risk. Choose based on your comfort level and the rate difference.
What about balance transfer credit cards?
A 0% APR balance transfer card can be excellent for consolidation if you can pay off the balance before the promotional period ends (typically 12-21 months). Watch for transfer fees, usually 3-5% of the balance.