Debt Consolidation Calculator

Estimate your potential savings on a debt consolidation loan

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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
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How to use this debt calculator

This debt consolidation loan calculator shows your debt management options, estimated monthly payments for each option and the time it will take to become completely debt-free, depending on the route you choose. Here’s how to customize this debt calculator:

  • Enter the values for your various debts, not including student loans or your mortgage. Indicate your credit score range, state of residence, whether you rent or own and other relevant information, such as your annual percentage rate (APR), home equity and any fees you may owe for debt settlement. Then, hit the “Calculate” button.
  • See how to reduce what you owe through debt settlement, consolidation with a personal loan or by shifting balances with a balance transfer credit card. Compare your savings in terms of the total interest you’ll pay, the estimated amount of your monthly payment and how long it will take to pay off your debt in full.
  • Under “Time vs. Money,” view the bar graphs comparing your debt consolidation options side by side.

How to pay off your debts early

Paying your debts off early can feel like a load off your shoulders, but there isn’t just one way to manage your debts. Here’s what you need to know about debt consolidation and the debt avalanche versus debt snowball methods.

Debt consolidation

If you have various types of loans scattered across multiple lenders, a debt consolidation loan may make it easier to pay off and manage those loans.

A debt consolidation loan offers consumers the ability to roll all their debts into a single loan with just one monthly payment. These types of loans are typically unsecured and come with fixed interest rates.

Some lenders may even send the loan funds directly to your original creditors when you take out a loan.

Debt avalanche

Debt stacking, or the debt avalanche method, is a debt repayment strategy that involves prioritizing debts with the highest interest rates.

To do this, examine each of your debts and find out which ones have the highest interest rates. Order them from highest to lowest, then focus on paying off the debt with the highest interest rate. Once you pay off that debt, move on to the debt with the second-highest rate and so on.

While this can be an effective strategy to save you money on interest in the long run, some people may not find it as enticing since it can take some time to pay off debts in this order.

Debt snowball

The debt snowball method focuses on borrowers paying off debts with the smallest balances first.

With this strategy, you can look into all your debts, then list them out from smallest to largest. From there, you’ll prioritize paying off the smallest debts first.

While you may spend more on interest in the long run than you would have with the debt avalanche method, this strategy can feel more inspiring to some borrowers as they’ll see more wins early on in the process since the balances are smaller.

Pros and cons of debt consolidation

Just like everything else in life, there are benefits and downsides to debt consolidation. Here’s what you should consider before getting a debt consolidation loan.

ProsCons

  You could lower your overall cost of loan repayment.

  Your monthly payment is fixed, making it simpler to create a budget.

  You’ll know when you’ll be debt-free, according to your repayment schedule.

  You could improve your credit score by making on-time payments every month.

  You could free up more income over the life of the loan while reducing its overall cost.

  You could lose your collateral if you take out a secured debt consolidation loan and are unable to repay it.

  There may be hidden costs in addition to interest, depending on how much you borrow.

  It may be difficult to qualify for a debt consolidation loan if you don’t have a good credit score and a favorable debt-to-income ratio.

  You could end up paying higher interest rates and fees, depending on your credit score.

Determining whether debt consolidation is the right approach for you depends on your individual financial circumstances.

Before weighing your options, determine whether your credit score and debt-to-income (DTI) ratio are good enough to get you approved for a debt consolidation loan with favorable terms.

The point of debt consolidation is to simplify multiple debts into one monthly payment, hopefully at a lower interest rate than you’re currently paying, and get you out of debt faster. If you can’t secure a better interest rate, a consolidation loan may not make sense.

Additionally, it is important to note that debt consolidation may not solve your problems, especially if you don’t change your spending habits. If you don’t decrease your expenses and make your payments each month, you will fall behind and could wind up deeper in debt.

Defaulting on your payments or making them late could cause you to lose assets you put up as collateral. You may also feel more financial stress, since you have a limited period of time to pay off your loan in full.

Other ways to manage your debt

Take out a personal loan

This type of unsecured debt isn’t backed by any assets, which means you won’t run the risk of losing your home, car or similar item if you default on it. As a result of lenders taking on more risk, personal loans may include higher interest rates.

Consider debt settlement

This form of debt relief offers you the opportunity to negotiate your debt with your creditors either as an individual or through a debt settlement company. The idea is to come to an agreement with your creditors to settle for a smaller amount than what you owe. Unfortunately, there is no guarantee that your creditors will agree to this. Keep in mind that debt settlement can show up on your credit report and may negatively impact your credit score.

Tap your home equity

A home equity loan allows you to borrow up to 85% of the equity in your home, or the difference between the value of your property and the balance of the mortgage owed on it. You could use the lump sum to pay off your outstanding debts — however, you could also lose your home if you default on the loan.

Use a balance transfer credit card

While you could pay little to no interest during the promotional period offered on a balance transfer card, you will likely still have to pay a balance transfer fee. Still, it could work in your favor if you’re able to pay off your loan quickly.

Borrow from your retirement

If you have enough funds already saved up in your account, you could take out a loan from your 401(k) to cover your debts. While you would forfeit the interest that would have been paid on your account, you could get up to five years to pay back the funds without penalty. However, there are some tax implications involved. In addition to regular income tax on the amount you withdraw, you will also pay a tax when you withdraw it again in retirement.

Nonprofit debt consolidation or debt management plan

Rather than taking out a loan to pay off your debts, you could work with a nonprofit credit counseling agency to negotiate a lower interest rate and monthly payment from your credit card company.

Frequently asked questions

If you have several types of debts, and keeping track of payments is becoming difficult, or if you can’t make headway in your repayment plan because the interest rates are too high, you may want to consider debt consolidation.

 

Debt consolidation makes sense if you can qualify for a better interest rate than what you are currently paying, thereby saving you money over the long run. Borrowers with a good credit score and a low DTI ratio could be eligible for loans with favorable terms.

Paying off $50,000 in debt can take anywhere from three to seven years. How much you pay in interest over the life of the loan will depend on how long your loan term is.

 

For instance, if you have a $50,000 loan with a five-year term and a 12% interest rate, you’ll have a monthly payment of $1,112.22 and pay a total of $16,733.34 in interest. However, if you shorten that to three years, you’ll pay $1,660.72 a month but just $9,785.76 in interest.

The debt you should pay off first depends on which strategy you want to use. For instance, if you utilize the debt avalanche method, you’ll first target your debts with the highest interest rates. On the other hand, if you use the debt snowball method, you’ll instead pay off the debts with the smallest balances.

 

The debt avalanche method can save you money on interest in the long run, but the debt snowball method may make you feel more accomplished, since those smaller balances may be easier to pay off quickly.

Debt consolidation loans can have a negative impact on your credit score if you are unable to make the monthly payments in full and on time.

 

Additionally, applying for a loan will likely require a hard credit inquiry, which can also cause a small dip in your score and can remain on your credit reports for up to two years. Otherwise, showing a history of making payments on time can demonstrate your reliability as a borrower and could boost your credit score in the long run.