Purpose and steps
The Debt Consolidation Payment Calculator calculates current debts versus one consolidation payment, rate, and total interest. Start with the defined inputs and their units, then use the equation and numerical example below to check the model. Tax tools use a simplified stated-year scenario, not a complete tax return.
- Confirm currency and monthly versus annual amounts. U.S. tax and loan models should be used within their stated scope.
- Prepare Consolidation-loan APR, New loan term. Defaults demonstrate the model rather than your personal circumstances.
- Check the headline result and its components. A key interpretation for this tool is: Weighted APR is a descriptive average; it does not reproduce different debts’ exact payoff schedules.
- Compare the baseline with a changed scenario: Compare cash-flow relief and total interest as separate outcomes.
Input reference and units
These values reproduce the model’s demonstration. Replace them with your own records or measurements; they are not recommended targets.
On a small screen, swipe the table horizontally to see all columns.
| Parameter | Demonstration value | How to enter it |
|---|---|---|
| Consolidation-loan APR | 8.99 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| New loan term | 5 years | Use years here. The model converts to months when the payment schedule requires it. |
Model-specific method
How this calculator produces its result
Consolidated principal = sum of debt balances. Current weighted APR = sum(balance × APR)/sum(balance), while current total interest is simulated separately for each fixed payment. The new loan uses fixed-rate amortization; interest saving = simulated old interest − new interest.
Annuities and the remaining-balance recurrence
A fixed-payment loan is an annuity: the discounted value of all future payments equals the amount borrowed today. Summing that geometric series gives the monthly-payment equation. Match the rate and time unit: monthly payments use an annual nominal rate divided by twelve and a term counted in months.
Each payment is split into interest and principal. Interest uses the opening balance, so paying extra principal now reduces later interest. A zero rate must use P/n rather than the formula’s zero-over-zero form. Keep full precision during the schedule and round only for display; a lender may round each actual posting differently.
P = Σ[t=1…n] M/(1+r)^t M = Pr / (1 − (1+r)^−n) Iₜ = Bₜ₋₁r; Bₜ = Bₜ₋₁ + Iₜ − paymentₜ
- P: principal today
- r: rate per payment period, not the annual percentage
- n: number of payment periods
- M: scheduled payment; B: remaining balance
Worked example
A $9,000 balance at 22% and $12,000 at 12% produce $21,000 principal and 16.29% weighted APR, not the simple average 17%. Even if a new payment is lower, a longer term may increase total interest.
Reproduce the default scenario
This is a separate example, calculated using the exact engine on the tool page and the defaults in the input reference above. Health examples use metric units. Displayed rounding may differ from intermediate precision.
- 9000 USD · 22% APR · 275 USD/month
- 12000 USD · 12% APR · 300 USD/month
- New consolidation payment
- 435.82 USD
- Total debt consolidated
- 21,000 USD
- Weighted current APR
- 16.29%
- Current monthly payments
- 575 USD
- Monthly cash-flow change
- 139.18 USD
- New-loan total interest
- 5,149.41 USD
- Estimated current-plan interest
- 8,272.18 USD
- Estimated interest savings
- 3,122.77 USD
Reading results without overstating them
- Weighted APR is a descriptive average; it does not reproduce different debts’ exact payoff schedules.
- Compare cash-flow relief and total interest as separate outcomes.
Assumptions and exclusions
- Origination fees, transfer promotions, new borrowing and declining minimum payments are excluded. If an old fixed payment does not cover interest, its payoff comparison is unavailable.
Sources and content notes
Toolify describes the implemented algorithm and its assumptions. Sources below support the topic or applicable rules; they do not endorse this calculator. Examples are illustrative, and published rules take precedence over simplified estimates.
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