If you're thinking about debt consolidation, you might want to take a look at our consolidation loan calculator. This tool is designed to help you figure out if a debt consolidation loan is right in your situation. The calculator uses your outstanding debt balances and existing monthly payments to figure out the impact of a consolidation loan on your monthly budget.
Calculator Definitions
The variables used in our online calculator are defined in detail below, including how to interpret the results.
This is where the calculator allows you to input a variety of loan balances you might be carrying. In each of the calculator cells you can enter outstanding loan balances for credit cards, installment loans, car loans, personal loans and any student loans you might be carrying.
Monthly Payments ($ / Month)
For each source of debt, there will be an associated monthly payment stream. For example, you might be making credit card payments to pay down a balance or a monthly payment on a car loan.
Consolidation Loan
In this section you are going to put in your assumptions for your consolidation loan. The calculator will compute a rolled up principal balance for all of your debt, but this is where you enter the loan's term and interest rate.
Annual Interest Rate (%)
This is the annual interest rate on the consolidated loan. This is not the APR, which takes into account other costs associated with the loan.
Term of the Loan (Years)
This is term or length of the consolidation, stated in years. Keep in mind that a longer term loan will result in lower monthly payment but the total interest paid on the consolidation loan will be higher.
Total Outstanding Debt ($)
This is the computed total of all your outstanding debt, including credit cards, student loans, car loans and any other debt you entered previously.
Total Monthly Payments on Debt ($ / Month)
This value is simply the total of all the monthly payments you entered for existing loans.
Consolidation Loan Payment ($ / Month)
This is the monthly payment you would need to make for your consolidated loan based on all your outstanding debt and the loan assumptions you've provided.
Savings on Monthly Payment ($ / Month)
This is the monthly savings you might realize by organizing all your outstanding debt into a consolidation loan. This value is simply the difference between the total of all your monthly debt payments and the consolidated loan payment.
Total Payment on Consolidation Loan ($)
This is the total of all your payment on the consolidated loan. This value is calculated by taking the monthly payment times the number of months this loan will be outstanding.
Total Interest Paid on Consolidation Loan ($)
The total interest paid is one thing you need to look at closely when consolidating loans. The value is derived by subtracting the value for the total outstanding debt from the total payments on the consolidated loan. This is like stating that any money you pay beyond the principal owed is interest expense.
With a consolidated loan, your monthly payment may be reduced because you are paying off the loan over a longer period of time or the interest rate is lower. However, if the term of the loan is long, you will be paying a lot of interest charges to the financial institution for borrowing this money over a long period of time.
Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.
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