Understanding Debt Consolidation

Our Debt Consolidation Calculator is a powerful tool designed to give you a clear picture of your financial situation. By entering your outstanding debts, such as credit card balances, personal loans, or medical bills, you can see if consolidating them into a new, single loan can help you save money and simplify your life.

What Is Debt Consolidation?

Debt consolidation is the process of taking out a new loan to pay off multiple other debts. The goal is typically to secure a lower overall interest rate, which can lead to a lower single monthly payment and significant savings on interest over the life of the loan. Instead of juggling multiple due dates and payments, you'll have just one to manage.

How Our Calculator Works

This calculator analyzes your current financial obligations against a potential consolidation loan. It calculates:

• Total Current Monthly Payments: The sum of all your individual debt payments right now.
• Total Interest Paid (Current): The total amount of interest you'll pay if you continue with your existing payment plans.
• New Monthly Payment: What your single monthly payment would be with the consolidation loan.
• Total Interest Paid (New): The total interest you'll pay on the new consolidation loan.
• Potential Savings: The difference in both monthly payments and total interest paid, highlighting how much you could save.

When is Debt Consolidation a Good Idea?

Debt consolidation can be a smart financial move if:

• You can secure a lower interest rate: The new loan's rate should be lower than the weighted average rate of your current debts, especially high-interest ones like credit cards.
• You're struggling with multiple payments: Simplifying your finances with a single payment can reduce stress and help you avoid late fees.
• You have a good credit score: A better credit score will help you qualify for a consolidation loan with favorable terms and a low interest rate.
• You are committed to not accumulating new debt: Consolidation works best when it's part of a plan to become debt-free, not a way to free up credit lines to spend more.

Types of Debt You Can Consolidate

Generally, you can consolidate most types of unsecured debt, including:

• Credit Card Balances
• Personal Loans & Lines of Credit
• Payday Loans
• Medical Bills
• Store Credit Cards

Secured debts like mortgages or auto loans are typically not included in this type of consolidation.