Debt Consolidation Calculator

See if consolidating your debts could simplify payments and potentially save you money.

Compare Your Debts vs. Consolidation

Enter Your Current Debts
Debt Name (Optional) Remaining Balance ($) Minimum Monthly Payment ($) Remove
Enter Potential Consolidation Loan Details
Should cover total debt balances.

What is Debt Consolidation?

Debt consolidation is the process of combining multiple existing debts (like credit cards, personal loans, medical bills) into a single, new loan. The goal is often to simplify finances by having only one monthly payment instead of many, and potentially to secure a lower overall interest rate or a lower monthly payment.

Common Ways to Consolidate Debt

  • Debt Consolidation Loans: These are typically unsecured personal loans taken out specifically to pay off other debts.
  • Balance Transfer Credit Cards: Moving high-interest credit card balances to a new card offering a 0% or low introductory APR for a limited time. Watch out for transfer fees and the interest rate after the promo period ends.
  • Home Equity Loan or HELOC: Using the equity in your home to secure a loan or line of credit. These often have lower interest rates but put your home at risk if you can't make payments.
  • Cash-Out Auto Refinance: Refinancing your car for more than you owe and using the difference to pay off debts. This increases your auto loan balance and risk.

Potential Pros and Cons

Pros:

  • Simplicity: One monthly payment instead of tracking multiple due dates.
  • Potentially Lower Interest Rate: If the consolidation loan's APR is lower than the average rate of your existing debts, you could save money on interest.
  • Potentially Lower Monthly Payment: Extending the repayment term or getting a lower rate can reduce your total monthly outlay, improving cash flow.

Cons:

  • May Not Save Money Overall: If you extend the repayment term significantly, you might pay more total interest, even with a lower rate.
  • Fees: Some consolidation options involve fees (origination fees, balance transfer fees, closing costs for home equity loans) that reduce savings.
  • Doesn't Address Spending Habits: Consolidation rearranges debt; it doesn't eliminate it or fix underlying spending issues.
  • Risk of More Debt: Some people run up balances again on the cards they just paid off.
  • Secured Debt Risk: Using home equity puts your home at risk.
Important: Debt consolidation is most effective if you get a lower interest rate and avoid accumulating new debt. Carefully compare the total cost (including fees) and ensure the new payment is manageable.

How to Use This Calculator

  1. Enter the remaining balance and minimum monthly payment for each debt you want to consolidate. Use the "+ Add Another Debt" button if needed.
  2. In the "Consolidation Loan Details" section, enter the total amount you plan to borrow (this should typically be the sum of the balances you entered), the Annual Percentage Rate (APR) of the potential new loan, the desired loan term in months, and any associated fees.
  3. Click "Compare Consolidation".
  4. The results will show your current total monthly payments compared to the new consolidation loan payment, the change in monthly payments, and the total interest and total amount you'd pay over the life of the *new* consolidation loan (including fees).

Disclaimer: This calculator provides estimates based on your inputs. It compares your current *total minimum payments* to the *new calculated payment*. It does not calculate the total interest you would pay on your *existing* debts (as this requires more detailed information like original terms). The primary comparison points are the change in monthly cash flow and the total cost of the *new* consolidation loan. It does not guarantee loan approval or terms. Consider all fees and the total cost before deciding.

Explore Debt Consolidation Options?

Blue Sky Loans may offer personal loans that can be used for debt consolidation. See if you qualify today.

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