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.
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 may be repaying.
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.
In this section, you are going to enter 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.
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.
This is the term or length of the consolidation loan, stated in years. Keep in mind that a longer term loan will result in lower monthly payments, but the total interest paid on the consolidation loan will be higher.
This is the computed total of all your outstanding debt, including credit cards, student loans, car loans, and any other debt you entered previously.
This value is the total of all the monthly payments you entered for existing loans.
This is the monthly payment you would need to make for your consolidated loan, based on your outstanding debt and the loan assumptions you've provided.
This is the monthly savings you might realize by organizing all your outstanding debt into a consolidation loan. This value is the difference between the total of all your monthly debt payments and the consolidated loan payment.
This is the total of all your payments on the consolidated loan. This value is calculated by taking the monthly payment times the number of months this loan will be outstanding.
The total interest paid is an important factor to consider when consolidating loans. The value is derived by subtracting the total outstanding debt from the total payments on the consolidated loan. This calculation reflects the fact that any money paid 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.
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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.