Debt Consolidation Calculator

By Janet Siroto | Updated June 24, 2024

If you’re dealing with debt (especially high-interest debt that seems to be rising despite your best efforts to pay it off), you may want to consider your options to eliminate it.

A debt consolidation calculator can be a valuable tool to help you see exactly how much you owe and how you might benefit from debt consolidation. With debt consolidation, you get one new loan, ideally at a lower cost, and that is used to pay off an array of debts. You can then focus on paying off your new, single loan and getting rid of that amount of debt hanging over you.

By consolidating multiple debts into a single loan, you only have one monthly payment to track and manage, making it easier to stay on top of your finances.

Explore the benefits and drawbacks of debt consolidation, and learn how a calculator can help you make an informed decision.

How to Use the Debt Consolidation Calculator

With a debt consolidation calculator, you can enter the details of your debts (say, credit card debt, a medical bill, a car loan) and see how you could save with a debt consolidation loan.

Step-by-step Guide to Using a Debt Consolidation Calculator

Here’s how debt consolidation calculators typically work.

  • necessities

    Enter Details About Your Debts

    Enter Details About Your Debts

    To start using a loan consolidation calculator, you will enter such facts as the balance of each debt you want to consolidate, the interest rate, and the monthly payments you are making. You can then see your results, which can include:

    • Total balance

    • Combined interest rate (the average weighted balance for all the debts you have entered into the calculator)

    • Total monthly payment (the amount you pay monthly toward your debts)

    • How long until you will be free of this debt given your current situation

  • wants

    Input Details About Your Financial Profile

    Input Details About Your Financial Profile

    Next, you’ll add information about, say, your credit score, and desired payoff time frame.

  • savings

    See Your Options

    See Your Options

    Once this data is put into the consolidation loan calculator, you can see how a debt consolidation loan might help make paying off your debt more affordable.

    💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

Benefits of Debt Consolidation

Here are some of the key upsides to debt consolidation:

• Simplifying debt management with a single payment

• Lowering interest rates and monthly payments, thereby saving you money

• Possibly shortening the period of time in which you are paying off this debt

• Potentially improving credit score and financial stability

Recommended: Can You Use Your Spouse’s Income for a Personal Loan?

Considerations for Debt Consolidation Loans

It’s important to be aware of these facets of debt consolidation loans:

• Your financial profile (your credit score range, for instance) can impact what offers you receive for debt consolidation loans. If you have poor credit, you may not qualify for a lower interest rate option.

• When you consolidate your debt, you still have debt. It doesn’t go away and you need to keep up with your payments.

• Debt consolidation doesn’t necessarily make the problem that caused your debt go away. If you are prone to impulse spending or live in an area with a high cost of living that has you struggling to pay bills, a debt consolidation loan may only be of temporary benefit.

💡 Quick Tip: Swap high-interest debt for a lower-interest loan, and save money on your monthly payments. Find out why credit card consolidation loans are so popular.

How to Choose a Debt Consolidation Option

If you’re considering a debt consolidation method, it’s worthwhile to review your potential options, including but not limited to a debt consolidation loan. These can include:

• Debt consolidation loans from a financial institution typically give you a sum of money to pay off your debts and then move on to eliminating your one new loan. You may also hear these referred to as unsecured personal loans, though some secured options may be available.

• Balance transfer credit cards, which can allow you to move your credit card balance to a card with a temporary zero-interest card (typically for up to 18 months), giving you breathing room to pay down your debt.

• A home equity loan (provided you have equity in a home to borrow against) can be a possibility, but you could lose your property if you don’t keep up with payments.

• A retirement plan loan could help you pay off your debt. While you do get your hands on cash, your retirement fund will be smaller and could face penalties and taxes.

• You might also look into working with a debt counselor to get a fuller view of your possibilities, especially if you are really struggling to keep up with what you owe. They may be able to advise you on debt management plans.

As you review your options, you should look carefully at debt consolidation loan offers. You can compare interest rates and terms from different lenders, as well as potential fees and other aspects of the loan.

Only you can decide which debt consolidation loan might be best for your needs or whether a different option is the right choice for handling your debt.

Recommended: Can You Refinance a Personal Loan?

The Takeaway

Using a debt consolidation loan calculator can help you see what your payments might look like if you replaced various debts with a single debt consolidation loan. These consolidation loans can simplify paying off your debt and may be able to save you money.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

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