How the Debt Consolidation Calculator works
Comparing two complete scenarios
The current plan carries every balance forward with monthly interest and Debt Avalanche payments. The consolidation plan repays all entered debts at the start and amortizes one new loan. Total out-of-pocket amounts, payoff timing, and monthly cash flow are compared from the same first payment month.
Weighted average APR is not enough
A balance-weighted APR can summarize current rates, but it cannot model changing balances, minimum-payment rollover, a new term, origination costs, financed fees, or early payoff. The calculator simulates each month because those details determine actual estimated cost.
Debt Avalanche and rollover
Each active current debt receives its minimum first. Remaining money goes to the highest APR, with smaller balance and original order as tie-breaks. The initial total debt budget stays fixed, so a paid-off debt’s minimum moves to the next target immediately.
Contractual loan payment
The new loan uses the standard fixed-payment amortization equation with nominal APR divided by 12. At 0% APR, principal is divided by the term. Extra payments begin in month one, final payments are limited to the amount due, and payoff may occur early.
Upfront fees vs financed fees
Upfront fees are outside the loan balance and never accrue loan interest. Financed fees increase original principal and therefore interest. In either case, origination fees are calculated from the refinanced debt amount and included only once in total out-of-pocket cost.
Why a smaller payment may cost more
Reducing the payment often lengthens repayment. More months of interest plus fees can outweigh a lower APR, so monthly cash-flow change and total cost difference are shown separately. A lower payment is a tradeoff, not an automatic improvement.
Loan term and total interest
A longer contractual term usually lowers the required payment but creates more opportunities for interest to accrue. Keeping the current debt budget or adding extra can shorten the modeled payoff, while the submitted term still determines the contractual minimum.
Understanding break-even APR
Break-even APR is found by repeatedly running the same consolidation simulation between 0% and 100%. It holds term, fees, fee handling, repayment plan, and extra payment constant and finds the highest rate that does not exceed the completed current plan’s total out-of-pocket cost.
Using schedules and charts
The monthly schedule lets you inspect aggregate balances and expand current-debt allocations. Yearly rows come directly from those months. The charts show remaining balances and cumulative borrowing costs, including fees at the start of consolidation.
Why a real offer may differ
Lenders may use daily interest, deduct fees from proceeds, apply different payment rules, or change terms after underwriting. Credit history and income can affect approval and pricing. Use the result to compare a consistent estimate with an actual disclosure, not as a guaranteed quote.
Model limitations
The model assumes fixed APRs, monthly accrual, no new purchases, no late payments, and full consolidation. It excludes promotional rates, penalties, taxes, lender-specific rounding, variable rates, credit limits, and behavioral changes. Current-debt projections stop after 1,200 months.