Free Debt Consolidation Calculator

Free Debt Consolidation Calculator

Use this calculator to compare your current debt situation with a potential debt consolidation loan. See how much you could save in interest and how much faster you could become debt-free.

Your Current Debt Situation

Proposed Consolidation Loan

function calculateDebtConsolidation() { var totalCurrentDebt = parseFloat(document.getElementById('totalCurrentDebt').value); var avgCurrentInterestRate = parseFloat(document.getElementById('avgCurrentInterestRate').value); var totalCurrentMinPayment = parseFloat(document.getElementById('totalCurrentMinPayment').value); var consolidationInterestRate = parseFloat(document.getElementById('consolidationInterestRate').value); var consolidationLoanTerm = parseFloat(document.getElementById('consolidationLoanTerm').value); // Input validation if (isNaN(totalCurrentDebt) || totalCurrentDebt <= 0 || isNaN(avgCurrentInterestRate) || avgCurrentInterestRate < 0 || isNaN(totalCurrentMinPayment) || totalCurrentMinPayment <= 0 || isNaN(consolidationInterestRate) || consolidationInterestRate < 0 || isNaN(consolidationLoanTerm) || consolidationLoanTerm <= 0) { alert('Please enter valid positive numbers for all fields.'); return; } // Convert annual rates to monthly decimal var currentMonthlyRate = (avgCurrentInterestRate / 100) / 12; var consolidationMonthlyRate = (consolidationInterestRate / 100) / 12; // — Current Debt Scenario Calculation — var currentPayoffMonths; var currentTotalInterest; if (currentMonthlyRate === 0) { // 0% interest currentPayoffMonths = totalCurrentDebt / totalCurrentMinPayment; currentTotalInterest = 0; } else { // Check if minimum payment covers at least the monthly interest if (totalCurrentMinPayment 0) { payoffTimeDifferenceString = payoffTimeDifferenceYears + ' years, ' + payoffTimeDifferenceRemainingMonths + ' months faster'; } else if (payoffTimeDifferenceMonths < 0) { payoffTimeDifferenceString = payoffTimeDifferenceYears + ' years, ' + payoffTimeDifferenceRemainingMonths + ' months longer'; } else { payoffTimeDifferenceString = 'No change'; } document.getElementById('totalInterestSaved').innerHTML = '$' + totalInterestSaved.toFixed(2); document.getElementById('monthlyPaymentDifference').innerHTML = '$' + monthlyPaymentDifference.toFixed(2); document.getElementById('payoffTimeDifference').innerHTML = payoffTimeDifferenceString; } // Run calculation on page load with default values window.onload = calculateDebtConsolidation;

Understanding Debt Consolidation

Debt consolidation is a strategy where you combine multiple debts, often high-interest ones like credit card balances or personal loans, into a single new loan. The primary goal is to simplify your payments and potentially reduce the total interest you pay over time, making your debt more manageable.

How Does It Work?

Typically, you take out a new loan (a personal loan, a balance transfer credit card, or a home equity loan) to pay off all your existing smaller debts. This leaves you with just one monthly payment to a single lender. The "free" aspect often refers to the absence of upfront fees for the consolidation service itself, though the new loan will always have an interest rate.

Benefits of Consolidating Debt

• Lower Interest Rates: If you qualify for a consolidation loan with a lower interest rate than your current average, you can significantly reduce the total amount of interest paid over the life of the loan.
• Simplified Payments: Instead of juggling multiple due dates and minimum payments, you'll have just one payment to remember each month.
• Fixed Repayment Term: Many consolidation loans come with a fixed term, giving you a clear end date for your debt.
• Potential for Faster Payoff: By reducing interest and having a structured plan, you might pay off your debt sooner than if you continued with minimum payments on multiple high-interest accounts.

Considerations Before Consolidating

• Interest Rates: Ensure the new loan's interest rate is genuinely lower than your weighted average current rates.
• Fees: While the calculator focuses on interest savings, be aware of any origination fees or balance transfer fees associated with the new loan.
• Loan Term: A longer loan term might mean lower monthly payments, but it could also lead to paying more interest overall, even with a lower rate. Our calculator helps you compare this.
• Credit Score Impact: Applying for a new loan can temporarily ding your credit score. However, successfully managing the consolidated debt can improve it over time.
• Underlying Habits: Consolidation is a tool, not a cure. If spending habits aren't addressed, new debt can accumulate.

How to Use This Calculator

Enter your current total debt amount, the average interest rate across your existing debts, and the sum of your minimum monthly payments. Then, input the interest rate and term (in months) for a potential consolidation loan. The calculator will instantly show you the estimated total interest paid, payoff time for both scenarios, and your potential savings in interest and time.

Disclaimer: This calculator provides estimates for illustrative purposes only. Actual results may vary based on specific loan terms, fees, and individual financial situations. Consult with a financial advisor for personalized advice.