Debt Consolidation Calculator
Consolidation Analysis
Enter your debt details and click "Calculate Consolidation" to see your potential savings.
Understanding Debt Consolidation
Debt consolidation is a strategy where you combine multiple debts into a single, larger loan, often with a lower interest rate or a more manageable monthly payment. The goal is to simplify your finances and potentially save money on interest over time.
How Does It Work?
Typically, you take out a new loan (like a personal loan, balance transfer credit card, or home equity loan) to pay off several existing debts, such as credit card balances, medical bills, or other personal loans. Instead of making multiple payments to different creditors each month, you make one payment to the new consolidation loan provider.
Benefits of Debt Consolidation
- Simplified Payments: Instead of juggling multiple due dates and minimum payments, you have just one payment to remember each month.
- Potentially Lower Interest Rates: If your new consolidation loan has a lower annual interest rate than your existing debts, you could save a significant amount on interest charges over the life of the loan.
- Reduced Monthly Payments: A longer loan term or lower interest rate can result in a lower monthly payment, freeing up cash flow in your budget.
- Clearer Path to Debt Freedom: Having a single, structured repayment plan can make it easier to track your progress and stay motivated.
Risks and Considerations
- Extending the Loan Term: While a longer term can lower your monthly payment, it might also mean you pay more in total interest over the life of the loan, even if the interest rate is lower.
- Fees: Some consolidation loans come with origination fees, balance transfer fees, or closing costs that can eat into your potential savings.
- Secured vs. Unsecured Loans: If you use a home equity loan for consolidation, you're using your home as collateral, putting it at risk if you can't make payments.
- Not Addressing Spending Habits: Consolidation doesn't solve the underlying issues that led to debt. Without addressing spending habits, you could accumulate new debt on the old accounts.
When is Debt Consolidation a Good Idea?
Debt consolidation can be a smart move if:
- You have a good credit score, allowing you to qualify for a lower interest rate than your current debts.
- You are disciplined enough to avoid accumulating new debt on the accounts you've paid off.
- You want to simplify your financial life and have a clear repayment plan.
- The calculator shows you will save money on total interest or significantly reduce your monthly payments without drastically increasing total interest paid.
How to Use This Calculator
This calculator helps you compare your current debt situation with a potential consolidation loan. Follow these steps:
- Enter Current Debt Details: For each of your existing debts (up to three), input the current balance, its annual interest rate, and the remaining term in months you expect to pay it off. The calculator will then estimate the monthly payment and total interest for each of these debts.
- Enter Proposed Consolidation Loan Details: Input the annual interest rate you anticipate for a new consolidation loan and the proposed loan term in months. The calculator will automatically use the sum of your current debt balances as the principal for this new loan.
- Calculate: Click the "Calculate Consolidation" button.
- Review Results: The results section will show you a comparison of your total current monthly payments and interest versus the proposed consolidation loan's monthly payment and total interest, highlighting potential savings or costs.
Use this tool as a guide to make an informed decision about whether debt consolidation is the right path for your financial situation.
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function calculateLoanPayment(principal, annualRate, termMonths) {
var monthlyRate = (annualRate / 100) / 12;
var monthlyPayment;
if (monthlyRate === 0) {
monthlyPayment = principal / termMonths;
} else {
monthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, termMonths)) / (Math.pow(1 + monthlyRate, termMonths) – 1);
}
return isNaN(monthlyPayment) || !isFinite(monthlyPayment) ? 0 : monthlyPayment;
}
function calculateConsolidation() {
// Get existing debt inputs
var debt1Balance = parseFloat(document.getElementById('debt1Balance').value) || 0;
var debt1Rate = parseFloat(document.getElementById('debt1Rate').value) || 0;
var debt1Term = parseInt(document.getElementById('debt1Term').value) || 0;
var debt2Balance = parseFloat(document.getElementById('debt2Balance').value) || 0;
var debt2Rate = parseFloat(document.getElementById('debt2Rate').value) || 0;
var debt2Term = parseInt(document.getElementById('debt2Term').value) || 0;
var debt3Balance = parseFloat(document.getElementById('debt3Balance').value) || 0;
var debt3Rate = parseFloat(document.getElementById('debt3Rate').value) || 0;
var debt3Term = parseInt(document.getElementById('debt3Term').value) || 0;
// Get consolidation loan inputs
var consolidationRate = parseFloat(document.getElementById('consolidationRate').value) || 0;
var consolidationTerm = parseInt(document.getElementById('consolidationTerm').value) || 0;
// Validate inputs
if (debt1Balance < 0 || debt2Balance < 0 || debt3Balance < 0 ||
debt1Rate < 0 || debt2Rate < 0 || debt3Rate < 0 || consolidationRate < 0 ||
debt1Term <= 0 || debt2Term <= 0 || debt3Term <= 0 || consolidationTerm <= 0) {
document.getElementById('result').innerHTML = 'Please enter valid positive numbers for all fields. Term must be greater than 0.';
return;
}
// Calculate for existing debts
var debt1MonthlyPayment = calculateLoanPayment(debt1Balance, debt1Rate, debt1Term);
var debt1TotalInterest = (debt1MonthlyPayment * debt1Term) – debt1Balance;
if (debt1Balance === 0 || debt1Term === 0) { debt1MonthlyPayment = 0; debt1TotalInterest = 0; } // Handle zero balance/term explicitly
var debt2MonthlyPayment = calculateLoanPayment(debt2Balance, debt2Rate, debt2Term);
var debt2TotalInterest = (debt2MonthlyPayment * debt2Term) – debt2Balance;
if (debt2Balance === 0 || debt2Term === 0) { debt2MonthlyPayment = 0; debt2TotalInterest = 0; }
var debt3MonthlyPayment = calculateLoanPayment(debt3Balance, debt3Rate, debt3Term);
var debt3TotalInterest = (debt3MonthlyPayment * debt3Term) – debt3Balance;
if (debt3Balance === 0 || debt3Term === 0) { debt3MonthlyPayment = 0; debt3TotalInterest = 0; }
var totalExistingBalance = debt1Balance + debt2Balance + debt3Balance;
var totalExistingMonthlyPayment = debt1MonthlyPayment + debt2MonthlyPayment + debt3MonthlyPayment;
var totalExistingInterest = debt1TotalInterest + debt2TotalInterest + debt3TotalInterest;
// Calculate for consolidation loan
var consolidationLoanAmount = totalExistingBalance;
var consolidationMonthlyPayment = calculateLoanPayment(consolidationLoanAmount, consolidationRate, consolidationTerm);
var consolidationTotalInterest = (consolidationMonthlyPayment * consolidationTerm) – consolidationLoanAmount;
if (consolidationLoanAmount === 0 || consolidationTerm === 0) { consolidationMonthlyPayment = 0; consolidationTotalInterest = 0; }
// Compare
var monthlyPaymentDifference = totalExistingMonthlyPayment – consolidationMonthlyPayment;
var totalInterestDifference = totalExistingInterest – consolidationTotalInterest;
var resultHTML = '
Your Current Debt Situation:
';
resultHTML += 'Total Current Debt Balance:
$' + totalExistingBalance.toFixed(2) + '';
resultHTML += 'Total Current Estimated Monthly Payments:
$' + totalExistingMonthlyPayment.toFixed(2) + '';
resultHTML += 'Total Current Estimated Interest Paid (over respective terms):
$' + totalExistingInterest.toFixed(2) + '';
resultHTML += '
Proposed Consolidation Loan:
';
resultHTML += 'Consolidation Loan Amount:
$' + consolidationLoanAmount.toFixed(2) + '';
resultHTML += 'Proposed Consolidation Loan Monthly Payment:
$' + consolidationMonthlyPayment.toFixed(2) + '';
resultHTML += 'Proposed Consolidation Loan Total Interest Paid (over ' + consolidationTerm + ' months):
$' + consolidationTotalInterest.toFixed(2) + '';
resultHTML += '
Comparison:
';
if (monthlyPaymentDifference > 0) {
resultHTML += 'Monthly Payment Savings:
$' + monthlyPaymentDifference.toFixed(2) + '';
} else if (monthlyPaymentDifference < 0) {
resultHTML += 'Monthly Payment Cost:
$' + Math.abs(monthlyPaymentDifference).toFixed(2) + '';
} else {
resultHTML += 'Monthly Payment Difference:
$0.00';
}
if (totalInterestDifference > 0) {
resultHTML += 'Total Interest Savings:
$' + totalInterestDifference.toFixed(2) + '';
} else if (totalInterestDifference < 0) {
resultHTML += 'Total Interest Cost:
$' + Math.abs(totalInterestDifference).toFixed(2) + '';
} else {
resultHTML += 'Total Interest Difference:
$0.00';
}
document.getElementById('result').innerHTML = resultHTML;
}