List your debts and a consolidation loan offer, and see whether replacing them with one loan would really cost you less.
Debt consolidation means taking out one new loan and using it to pay off several existing debts, such as credit cards. You are then left with one monthly payment, usually at a lower rate than the cards. It can simplify your finances and cut the interest you pay, but only if the new loan really costs less than the old debts. Fees, a longer term and a loan that is too big can all cancel out the saving.
The calculator compares the APR of your existing debts with the APR of the consolidation loan. The APR is the yearly rate that makes your payments exactly repay the money you actually receive, so it includes any fee. For your current debts it is worked out from the payments needed to clear them, paying the same total each month and the highest-rate debt first. For the loan it uses the cash left after the fee. If the loan APR is lower, consolidating costs less. If not, the loan is not recommended.
The table sets your existing debts beside the consolidation loan: the APR, the monthly payment, how long each takes to pay off, the fee, the cash you would have left or need to add, the total payments and the total interest. A lower monthly payment is not the same as a lower cost, because a longer term means more interest overall. Look at the total payments and the APR together before you decide.
APR is the yearly rate that makes your payments repay the cash you actually receive, so it includes fees. Comparing the APR of the new loan with the APR of your current debts shows which really costs less.
The calculator assumes you keep paying the same total each month, which is the sum of your minimum payments, and puts any extra on the debt with the highest rate. It then finds how long that takes and what it costs.
It is the cash from the loan after the fee, minus the balance of the debts you want to pay off. A negative number means you need to add that much of your own money. A positive number means you would have that much left over.
Yes. A fee, a high rate or a much longer term can make the loan more expensive than your current debts. The calculator tells you when the loan APR is not lower than your current APR.
The calculator shows the amount left over, but borrowing more than you owe adds to your debt. It is usually better to borrow only what you need to pay off the old debts.
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