Debt Consolidation Calculator

About the Debt Consolidation Calculator

Debt consolidation means taking one new loan, usually a personal loan, to pay off several existing debts such as credit card balances, consumer loans and other personal loans. You then have one EMI, one due date and, ideally, a lower interest rate. Credit card debt can cost 36–42% a year if you only pay the minimum, so moving it to a personal loan can cut your interest sharply. Consolidation is not always cheaper, though, and this calculator helps you check before you apply.

Enter up to five debts with their outstanding balance, annual interest rate and the amount you currently pay each month. The calculator works out how long each debt takes to clear at that payment and how much interest you would pay. It then compares that with one consolidation loan at the rate, tenure and processing fee you enter. If a payment doesn't cover the monthly interest, as with minimum payments on a card, the calculator flags it because that debt would never be paid off.

A lower monthly payment isn't the same as a saving. Stretching the debt over a longer tenure can lower the EMI but raise the total interest. Compare the net saving figure, and close or cap the cards you pay off so the balances don't build up again.

How to use it

• Use the rate a lender actually offers you, not the advertised starting rate. Your CIBIL score largely decides it.
• Include the processing fee (often 1–3% plus GST) and any foreclosure charges on the loans you're closing.
• Pick the shortest tenure whose EMI you can comfortably afford.
• After consolidating, avoid running up new card balances, or you will end up with more debt than before.