Would consolidating your debts into a single loan reduce your monthly payment, total interest, or both — and what does the all-in comparison actually look like?
This tool is for: People carrying multiple high-rate credit cards or loans who are evaluating a personal consolidation loan · Borrowers who have received a consolidation loan offer and want to compare its true cost against their current payoff trajectory · Anyone trying to determine whether a lower consolidation rate offsets the origination fee over the loan term
- Your estimated consolidation loan monthly payment at the offered rate and term
- How many months your current debt would take to pay off at your current payment level
- The all-in total cost of the consolidation loan including the origination fee
- The estimated interest savings (or additional cost) of consolidating versus staying on the current payment schedule
Formulas Used
Current Debt Payoff Time (Closed-Form)
n = ceil(-ln(1 - B×r/P) / ln(1+r))
Where: n = Months to payoff at current payment (months), B = Current total balance (USD), r = Monthly interest rate (weighted average APR / 12) (decimal), P = Current total monthly payment (USD)
Source: Standard amortization closed-form — Consumer Financial Protection Bureau ✓ Verified
Consolidation Loan Monthly Payment (Fixed-Rate Amortization)
M = B × [r(1+r)^n] / [(1+r)^n - 1]
Where: M = Consolidation monthly payment (USD), B = Total balance consolidated (loan principal) (USD), r = Monthly interest rate (consolidation APR / 12) (decimal), n = Consolidation loan term in months (months)
Source: Standard amortization formula — Consumer Financial Protection Bureau ✓ Verified
Consolidation All-In Total Cost
Total = (M × n) + Fee
Where: Total = All monthly payments plus origination fee (USD), M = Consolidation monthly payment (USD), n = Consolidation term in months (months), Fee = Origination fee (balance × fee rate) (USD)
Source: Derived from standard amortization and lender fee convention ✓ Verified
Key Insight
On a $10,000 balance at 18% APR with a $300/month payment, the current estimated payoff takes 47 months at a total cost of approximately $13,967. A consolidation loan at 9% APR over 48 months with a 2% origination fee costs $12,145 all-in — estimated savings of $1,822. However, the consolidation payment is $248.85/month versus $300 currently. When the rate reduction is small or the origination fee is high, consolidation may cost more in total — always compare total_cost, not monthly payment alone.
Frequently Asked Questions
How do I calculate a weighted average APR across multiple debts?
Multiply each debt's outstanding balance by its APR, sum those products, then divide by the total combined balance. For example: a $3,000 balance at 22% and a $7,000 balance at 16% gives (3000×22 + 7000×16) / 10000 = (66000 + 112000) / 10000 = 178000 / 10000 = 17.8%. Enter 17.8% as the weighted average APR. Using an unweighted average overstates or understates the blended interest cost depending on how balances are distributed.
Can consolidation increase my total cost even if the rate is lower?
Yes. A lower rate on a longer term can cost more in total than a higher rate paid off faster. For example, refinancing a $10,000 balance from 18% (paying $300/month, 47 months, ~$13,967 total) to 9% over 84 months ($127/month) produces a lower payment but roughly $14,668 in total repayment — more than the current path. The direction of the savings depends on the rate difference, the term, and the origination fee. This calculator computes total_cost for both scenarios so you can compare directly.
What origination fee is typical for a personal debt consolidation loan?
Origination fees on personal consolidation loans typically range from 1% to 6% of the loan amount, depending on the lender type and borrower credit profile. Online lenders commonly charge 2–5%; traditional banks and credit unions are often at 0–2%. The fee is typically deducted from the disbursement or added to the loan balance. When comparing lenders, compare both the APR and the origination fee — a lender charging 0% origination at a slightly higher rate may cost less in total for shorter loan terms.
Does this calculator account for the effect of closing individual accounts after consolidation?
No. This calculator focuses on the financial cost comparison: monthly payment, payoff timeline, total interest, and origination fee. It does not model credit utilization changes, credit score impact, or the effect of closing revolving accounts. Those factors are not part of the interest-savings calculation but may be relevant to the broader decision — particularly if the accounts being consolidated are credit cards with available credit that affects utilization ratios.
About This Calculator
Sources:
- Consumer Financial Protection Bureau — Paying Off Multiple Credit Cards — Debt payoff strategies, amortization mechanics, and the trade-offs between consolidation approaches
- Federal Reserve — Consumer Credit (G.19) — Benchmark consumer loan rate data used to contextualize typical personal loan and credit card APR ranges
Limitations:
- Current debt side uses a single weighted average APR — if individual debts have significantly different rates and balances, the weighted average may not accurately reflect actual total interest accumulation
- Current total monthly payment is assumed fixed for the full estimated payoff period — credit card minimum payments decline as balances drop, making this an optimistic estimate of current payoff speed
- Consolidation loan assumes a fixed rate for the full term — variable-rate consolidation products will produce different results as rates change
- Does not model prepayment of the consolidation loan or partial extra payments
- Origination fee is modelled as a lump sum deducted at origination — some lenders roll the fee into the loan principal, which increases the amount owed and total interest
When to consult a professional: Before consolidating more than $10,000 in debt, when the current debts include secured obligations (auto loans, HELOCs), or when total debt exceeds annual income
This calculator estimates the cost comparison between continuing current debt payments and taking a consolidation loan, using the standard fixed-rate amortization formula and a weighted average APR for the current debt. Actual results depend on exact payment history, rate type (fixed vs. variable), whether minimum payments are used, and lender-specific terms. This tool does not constitute financial or debt counseling advice.