Debt Consolidation Calculator
Compare keeping your current debts against consolidating them into one lower-rate loan: monthly payment, months to clear and total interest difference.
Input Data
Results
At a glance:Debt consolidation rolls multiple high-interest debts (credit cards, personal loans) into one lower-rate loan repaid by fixed instalments, simplifying repayment and possibly saving interest. The core comparison: keep current debts rolling on the existing monthly payment until cleared, versus a consolidation loan (current balance + prepaid fee) repaid by equal instalments at the consolidation rate and term. Consolidated monthly payment = principal × r × (1+r)^n ÷ [(1+r)^n − 1], with r = consolidation annual rate ÷ 12 and n = consolidation term × 12. Whether you save interest depends on the new rate and new term: a longer term lowers the monthly payment but can raise the total interest.
Formula
Current debts: balance = previous balance × (1 + current monthly rate) − current monthly payment, rolling to zero; accumulated interest is the current total interest.
Consolidation principal = current balance + prepaid fee (balance × prepaid fee%).
Consolidated monthly payment = principal × r × (1+r)^n ÷ ((1+r)^n − 1), r = consolidation rate ÷ 12, n = consolidation term × 12.
Consolidated total interest = consolidated monthly payment × n − current balance; difference = current total interest − consolidated total interest.
$$\text{ConsolPrincipal} = \text{CurrentBalance} \times (1 + \text{PrepaidFee}\%)$$$$\text{NewPMT} = \text{ConsolPrincipal} \times \dfrac{r(1+r)^{n}}{(1+r)^{n} - 1}, \quad r = \dfrac{\text{ConsolRate}}{12}, \quad n = \text{Years} \times 12$$$$\text{InterestDifference} = \text{OldTotalInterest} - (\text{NewPMT} \times n - \text{CurrentBalance})$$How to Use
- Enter the current debts total balance, total monthly payment and weighted-average annual rate.
- Enter the consolidation loan annual rate, term and prepaid fee rate (0 if none).
- Compare the monthly payment, months to clear and total interest before and after consolidation.
FAQ
Does debt consolidation always save money?
Not necessarily. Whether you save interest depends on the new rate and the new term. A consolidation rate clearly lower than your current average usually saves interest; but if you stretch the term a lot just to lower the monthly payment, the total interest can rise despite the lower rate. Compare both total interest and time to clear, not just the monthly payment.
What does a positive 'monthly payment difference' mean?
A positive number means the consolidated monthly payment is lower than your current one, easing cash-flow pressure. But a lower payment usually comes with a longer term — also check whether the 'total interest difference' is positive (actual savings). If total interest difference is negative, you pay less each month yet more in interest overall.
How does the tool handle multiple debts with different rates?
For simplicity, the tool treats all your debts as a single balance and rolls interest at the weighted-average annual rate you enter. In reality each debt has its own rate, repayment order and terms, so the result is an estimate; for precise planning list debts individually or consult a debt-relief adviser.
How should I fill in the 'prepaid fee rate', and does it affect the result?
The prepaid fee rate is the handling/set-up fee charged as a percentage of the current balance (0 if none). It is added to the consolidation principal, raising both the monthly payment and total interest, thus shrinking your savings. When comparing lenders, include handling fees and early-repayment charges to reflect the true cost.
What are the formulas and data basis of this calculator?
Current debts roll month by month — balance = previous balance × (1 + monthly rate) − monthly payment, until zero, with accumulated interest as the current total interest. The consolidation loan uses the standard equal-instalment (annuity) formula: monthly payment = principal × r × (1+r)^n ÷ ((1+r)^n − 1), with principal = current balance + prepaid fee. The comparison table is computed from these. For Hong Kong debt restructuring and debt relief (DRP/IVA) information, refer to the IFEC. Results are for reference only; actual plans follow the lender's contract.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.