Debt Consolidation Comparison Calculator

Purpose and model boundary

Use this to price the debts you have now against a single consolidation loan offered to replace them. Both routes are followed month by month, the origination fee is counted, and the whole life of each is compared, so the question the offer letter leaves out can be answered: whether a smaller monthly payment costs more in the end.

It prices one offer against one set of debts. It does not search for offers, does not judge whether you would be approved, and does not model a balance you keep adding to after the loan is taken out.

Inputs and units

Governing relationships

Every debt is followed month by month at its own rate. Each month a debt is charged one twelfth of its annual rate on the balance standing at the start of that month, its payment is applied, and what remains carries forward. A debt whose payment was left blank is followed at the issuer minimum, which is that month's interest plus one percent of the balance with a money floor underneath, so its payment falls as its balance does.

The consolidation loan is a level instalment loan. It lends the sum of the balances plus the origination fee, and the same payment is due every month until the term ends. What it costs in all is that principal plus every month of interest charged on it.

The two differences reported are the consolidated payment less what you pay now, and the consolidated total cost less what carrying on as you are would cost. They can point in opposite directions, and that is the finding this calculator exists for.

Calculation sequence

This is the order in which the reported figures depend on one another, each step traceable to what the calculator says a figure is built from. It is not a claim about the order in which the workbook evaluates its own cells.

1. Read the debts, filling in the issuer minimum for any debt whose payment was left blank, and add up what they take from you this month.
2. Follow every debt to the month it clears, accumulating the interest each one charges, and take the longest of them as how long the debts run.
3. Add the balances together and add the origination fee to get what the new loan has to lend.
4. Work out the level instalment that clears that principal at the offered rate over the offered term, and the interest it charges over the whole term.
5. Add the principal and the interest to get what the consolidation route costs in all, and do the same for the debts as they stand.
6. Subtract one monthly payment from the other, and one total cost from the other, to get the two differences the page leads with.
7. Rerun the comparison across a grid of offered rates and terms, so the point at which the offer starts to be worth taking is visible rather than asserted.

Outputs and interpretation

Model Status reads OK, or explains why the inputs are not valid or why the answer deserves a second look. The warning this calculator exists for is the one that says consolidating costs more in total even though the monthly payment falls.

The calculator also returns a grid that reruns the comparison across a range of offered rates and terms at once. Its axes, corner and body arrive as separate values and are the grid's parts rather than results to read on their own; the page assembles them into the table.

Every figure above is returned by the model. The page arranges and formats them; it computes none of them.

Validation and status logic

These are the states the delivery's own recorded runs exercise, so the table records what this calculator has been observed to return rather than every branch it could take. A figure that moves with the inputs is shown as ….

Assumptions and limitations

• Interest on every debt is charged once a month, at its annual rate divided by twelve, on the balance at the start of the month.
• A payment freed when one debt clears is not redirected at the others. The debts are followed exactly as you describe them, because assuming you would roll a freed payment onward would make the current route look better than your own habits make it.
• A debt whose payment is left blank is followed at the issuer minimum rule, which is that month's interest plus one percent of the balance with a money floor.
• The origination fee is added to the amount borrowed. A lender that instead deducts its fee from the advance would have to lend slightly more to clear the same debts.
• No early repayment charge on the new loan is modelled, and nothing charged to the old accounts after they are paid off is counted.
• Whether the offer would be approved, and at what rate, is outside the model entirely.

Restrictions and non-computing states

This calculator enforces the numeric limits recorded above before either route is run, so a value outside them is refused rather than answered.

At least two debts must carry both a balance and a rate. One debt replaced by one loan is a refinance rather than a consolidation, and the calculator says so rather than answering a different question.

The debts must be listed from the first row down with no gap between them. A filled row below a blank one is refused rather than quietly skipped, because a silent skip would produce figures that look correct and are not.

Every route is followed for a limited number of months. Where a debt or the loan has not cleared inside that window, the run stops there and the status line says the cost is understated rather than reporting the window as if it were a payoff.

Errors and warnings

NOT VALID means the inputs do not describe a question this calculator can answer, and the figures beside it should not be relied on. CHECK is not an error: the arithmetic is sound and the figures stand, but something about the combination is worth knowing before the answer is used. The most important of those is the one that says consolidating costs more overall, which is a correct answer rather than a fault. The status is shown with the results rather than in place of them, so a flagged answer is still a readable one.

A value the page itself refuses, because it falls outside the limits above, is rejected before the calculation is requested and no figures are returned at all. That is different again from a transport or service failure, where the page reports that the result could not be fetched rather than showing a stale or partial one.

On what debt consolidation is, and why a lower monthly payment over a longer time can still cost more in total once fees and interest are counted, see the Consumer Financial Protection Bureau's What do I need to know about consolidating my credit card debt?

These sources provide background; they do not supply the calculator's assumptions or certify its result. This calculator is informational and is not financial, investment, or tax advice. Results follow directly from the debts and the offer terms you enter, and whether such an offer would be made to you is not something any calculation can answer.