Debt Consolidation True Cost Calculator
Example: Total debt to consolidate: 20000 $ · Current blended APR (weighted average): 19.5 % · Months remaining on current debts: 48 months · Consolidation loan APR: 11.5 % · Consolidation loan term: 60 months · Origination fee: 3 %
| Total cost difference (positive = consolidation wins) | $1,967 |
| Current monthly payment | $603 |
| Consolidation monthly payment | $440 |
| Monthly cash-flow savings | $163 |
| Current total interest (remaining) | $8,958 |
| Consolidation total interest (net of fee) | $6,391 |
Worked example
Consolidating $20,000 of 19.5%-APR debt (48 months remaining) into an 11.5% loan over 60 months with a 3% fee ($600). Current payments: about $596/month, $8,608 total remaining interest. New loan: about $439/month, roughly $6,340 in interest net of the fee. Monthly cash flow improves by $157, and total cost drops by about $2,268 — consolidation wins here. But if the new term were 84 months, the calculus might flip despite the lower rate.
Frequently asked questions
Why can a lower rate sometimes cost more in total?
A longer repayment term multiplied by even a modest monthly payment generates more total interest than a shorter, higher-payment schedule. If consolidation stretches a 3-year payoff into 7 years, you may pay thousands more in total even at half the APR. This tool shows exactly when that happens.
What APR should I enter for my current debts?
Calculate a balance-weighted average: multiply each balance by its APR, sum those products, then divide by the total balance. For example, $10,000 at 24% and $10,000 at 15% gives a weighted APR of 19.5%. Many debt-payoff apps display this automatically.
Are there non-cost reasons to consolidate?
Yes. Simplification (one creditor, one due date), improved credit utilization if cards are paid off, and reduced cognitive stress are real benefits that this calculator cannot quantify. The goal is to go in knowing the full financial cost, then decide whether those benefits justify any premium.
Is debt consolidation the same as debt settlement?
No. Consolidation replaces multiple debts with one loan at an agreed rate — your credit is not damaged and the balances are fully repaid. Settlement involves negotiating to pay less than you owe, which significantly damages your credit and may trigger tax consequences on the forgiven amount.