Debt Consolidation Calculator

About the Debt Consolidation Calculator

Consolidation is sold on the monthly payment, and the monthly payment is the one number that cannot tell you whether it is a good idea.

Rolling several debts into one loan nearly always reduces what you pay each month, because the new loan is usually longer than what remained on the old ones. A lower payment over a longer term can easily cost more in total while feeling like relief.

Feeling like relief is what the product is selling. This debt consolidation calculator compares on total cost instead, and reports the monthly change beside it rather than as the headline.

How to Use the Debt Consolidation Calculator

For each existing debt, enter the balance, the rate, and the payment you are currently making on it. That last one matters — it is what determines how long the debt would take if you changed nothing, which is the only fair comparison.

Then the consolidation loan rate, the term, and any arrangement fee.

Step-by-Step Example

£6,000 at 22.9% and £4,000 at 18.9%, being paid at £250 and £180 a month. Consolidating at 9.9% over 60 months with a £300 fee.

  Now:     10,000 total, 430.00 a month
  New:     10,300 borrowed (fee financed), 218.34 a month over 5 years

  Interest now:   3,063.01
  Interest new:   3,100.29
                  ────────
  Costs more by:     37.28

The rate fell from 22.9% and 18.9% to 9.9%. The monthly payment fell by £211.66. And the total cost went up.

That is the trap in one example, and it is not an unusual set of figures.

Where the Money Actually Went

The calculator separates the two reasons a payment can fall, because they are very different things.

  Same 9.9% rate, over the 2 years 9 months
  your current debts would have taken:     1,807.80 of interest
  Over the 5-year consolidation term:      3,100.29
                                           ────────
  Cost of the longer term alone:           1,292.49

The rate saved money. The term gave it all back and more.

At 9.9% over 2 years 9 months, the payment would be £357.81 — still less than the £430 you pay now, and the loan would cost £1,807.80 instead of £3,063.01. That is a real saving of over £1,200.

Shorten the term and consolidation becomes a genuine saving. Leave it long and it becomes a payment reduction you pay for.

The Fee Is Borrowed Money

A £300 arrangement fee added to the loan is not a £300 cost.

It is £300 of extra principal accruing interest for sixty months. On the example figures the fee ends up costing meaningfully more than its face value, which is why this calculator finances it into the balance rather than adding it to the total at the end.

If you can pay the fee separately rather than rolling it in, do.

When Consolidation Is Genuinely Right

Change the term to 36 months at 6.9% with no fee:

  308.31 a month instead of 430.00
  1,099.30 of interest instead of 3,063.01
                                  ────────
  A genuine saving of             1,963.71

Lower payment and lower cost. That is what a good consolidation looks like, and the conditions are specific:

• The rate is materially lower.
• The term is no longer than your current debts would take.
• You can close the accounts behind you.

There is also a legitimate case that has nothing to do with total cost: when the current payment is one you genuinely cannot sustain, a lower payment over a longer term may be what makes the plan survivable. That is a reasonable trade — it is just worth knowing it is a trade rather than a saving.

The Risk That Is Not Arithmetic

Consolidation clears your cards to zero and leaves them open.

Running them back up turns one debt into two, and this is the most common way consolidation ends badly. No calculator can model it, so it has to be said plainly: close the accounts, or make them genuinely hard to reach, on the day the loan lands.

If the cards go back up, you will be paying the consolidation loan and the cards together, on a larger total than you started with.

Understanding Your Result

Total cost is the headline, because it is the number that decides.

Monthly payment is the change most people look at first — reported, but not led with.

Interest either way compares the two directly.

Rate against term is the most useful line: how much of the difference is the better rate and how much is simply borrowing for longer.

Worth knowing gives the verdict and the behavioural warning.

When Should You Use This Calculator?

Before accepting any consolidation offer. Particularly one presented as a monthly saving.

To find the right term. Try shortening it until the total cost beats what you pay now — that term is the real offer.

When a payment is genuinely unaffordable. Here the trade may be worth making, and it helps to know its size.

Against the alternative. The debt snowball calculator shows what attacking the debts in order would do without borrowing at all.

Common Mistakes

Comparing monthly payments. It is the number that tells you least.

Ignoring the term. It is usually where the entire difference lives.

Treating the fee as a one-off. Financed, it accrues interest for the whole term.

Leaving the cards open. The single biggest cause of consolidation failing.

Consolidating debt you could clear quickly anyway. If the current payments would finish in eighteen months, a five-year loan is a step backwards regardless of the rate.

Assuming approval means it is a good deal. Lenders approve loans that are profitable for them.

Every figure here is an estimate for planning. This is not financial advice, and if debt is unmanageable a free debt advice service is the right place to go.