Debt Consolidation Calculator — Is It Worth It?
Compare your current debt path vs. consolidating into a personal loan — including origination fees. See monthly savings, total interest saved, and a side-by-side cost comparison for up to 3 debts.
Debt Consolidation
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The Formula
The consolidation loan uses standard amortization to calculate the new payment. True savings must subtract the origination fee from the interest saved — a step most basic calculators miss entirely. This gives you the real bottom line, not just a rosy monthly payment comparison.
Variable Definitions
The Hidden Cost
Personal loans typically charge 1-5% of the loan amount upfront, either deducted from the disbursement or added to the loan balance. A $10,000 loan with a 3% origination fee costs $300 immediately. Always factor this into the real break-even analysis to get an accurate picture of your true savings.
When Consolidation Pays Off
Divide the total upfront cost (origination fee) by the monthly savings to find the break-even month. If the fee is $300 and you save $75/month, you break even in 4 months. After that, every month of savings is pure financial gain.
Your Blended Interest Rate
If you have three debts at 22%, 19%, and 10%, your weighted average rate depends on the balance at each rate. Consolidation is most effective when your new rate is significantly below the weighted average of all existing debts. The new rate does not need to be lower than every individual rate to be beneficial.
How to Use This Calculator
- 1
Enter up to 3 existing debts with their current balance, interest rate, and monthly payment amounts.
- 2
Enter the consolidation loan's new interest rate, term (in months), and origination fee percentage.
- 3
Review the side-by-side comparison of monthly payment, total interest paid, and payoff timeline for both strategies.
- 4
Check the "Total Lifetime Savings after fees" figure — this is the true bottom line that tells you whether consolidation actually saves you money.
Common Applications
- Compare your current total debt payments against a consolidation loan to see if rolling multiple debts into one actually saves you money.
- Evaluate whether the interest savings from consolidation outweigh the origination fees and extended repayment term.
- Determine the break-even point where consolidation fees are recouped through lower monthly interest charges across all debts.
Debt consolidation combines multiple high-interest debts into one loan at a lower rate, but origination fees and extended terms can reduce or negate the savings
Understanding the Concept
Debt consolidation works when your new interest rate is meaningfully lower than the weighted average rate you are currently paying across multiple debts. However, the origination fee is the often-overlooked variable that can flip the math. A $15,000 personal loan with a 3% origination fee ($450) requires you to save at least $450 in interest before you break even — and that is $450 you would not owe if you kept paying the original debts separately. A lower rate that significantly extends your repayment term can also result in you paying more total interest even with a lower monthly payment. This tool exposes that trade-off clearly so you can make an informed decision.
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