Debt Consolidation Calculator
This professional-grade calculator helps you compare paying off your existing debts as-is versus consolidating them into a new personal loan. Enter your balances, APRs, and payments, then set the consolidation loan terms to see monthly cash flow changes, time-to-debt-free, and total interest savings.
Calculator Inputs
Consolidation Loan
Results
Total Principal: $0.00
Data Source and Methodology
Authoritative source: Consumer Financial Protection Bureau (CFPB), “How credit card interest is calculated” (Updated 2024). Direct link: CFPB.gov. All amortization and payment formulas align with standard banking mathematics.
All calculations strictly follow the formulas and definitions from the cited source.
The Formulas Explained
Monthly rate: \( r = \frac{\text{APR}}{12 \times 100} \)
Months to payoff (per debt): if \( r > 0 \): \( n = \frac{-\ln\!\left(1 - \frac{rB}{P}\right)}{\ln(1+r)} \), with \( P > rB \). If \( r = 0 \): \( n = \frac{B}{P} \).
Total interest (per debt): \( I = nP - B \)
Consolidation payment: for loan amount \( L \), rate \( r_c \), term \( N \): if \( r_c > 0 \): \( P_c = \dfrac{L \, r_c}{1 - (1 + r_c)^{-N}} \). If \( r_c = 0 \): \( P_c = \dfrac{L}{N} \).
Interest (consolidation): \( I_c = NP_c - L \)
Monthly change: \( \Delta P = \sum P_i - P_c \)
Interest savings: \( S_I = \sum I_i - I_c - F \) where \( F \) is any fee paid upfront. If financed, \( F \) is included in \( L \).
Glossary of Variables
- Balance (B): Current principal you owe on a debt.
- APR: Annual Percentage Rate of the debt.
- Monthly Payment (P): Amount you intend to pay monthly for that debt.
- Months to Payoff (n): Time needed to fully pay the debt under P and APR.
- Total Interest (I): Interest paid over the payoff period.
- Loan Amount (L): Sum of balances to consolidate, plus any financed fee.
- Consolidation Payment (Pc): Monthly payment for the new loan.
- Term (N): Number of months in the consolidation loan.
- Origination Fee (F): A fee charged by the lender; can be financed or paid upfront.
How It Works: A Step-by-Step Example
Inputs: Debt A: B = $5,000, APR = 20%, P = $200. Debt B: B = $8,000, APR = 12%, P = $300. Consolidation: APR = 9.99%, N = 60 months, Fee = 3% (financed).
Totals: Principal = $13,000; financed fee = $390; L = $13,390.
Monthly rates: Debt A r = 0.20/12; Debt B r = 0.12/12; Loan r = 0.0999/12.
Months to payoff per debt: \( n_A = \dfrac{-\ln(1 - r_A B_A / P_A)}{\ln(1+r_A)} \), \( n_B = \dfrac{-\ln(1 - r_B B_B / P_B)}{\ln(1+r_B)} \). The current plan ends when the last debt finishes: \( n_{current} = \max(n_A, n_B) \).
Consolidation payment: \( P_c = \dfrac{L r}{1 - (1+r)^{-60}} \). Compare \( \sum P_i = \$500 \) vs. \( P_c \) to see monthly change. Total interest saved is \( S_I = (I_A + I_B) - I_c \).
This mirrors the live calculator’s logic and will match results (modulo rounding).