What this calculator does
Takes multiple debts (balance, APR, and monthly payment for each) and a proposed consolidation loan (amount, APR, term). Returns total cost of existing debts vs the consolidation loan, monthly payment difference, and total interest saving or extra cost.
The formula
For each existing debt, amortise to find total interest:
Each month: interest = balance × (APR / 12)
principal = payment − interest
balance = balance − principal
Sum interest until balance = 0
Total current cost = sum of all balances + sum of all interest paid
Consolidation loan:
Monthly payment = L × r / (1 − (1 + r)^−n)
Where L = loan amount, r = APR/12, n = term months
Total interest = (monthly × n) − L
Total cost = L + total interest
Net saving = Total current cost − Total consolidation cost
Monthly cash flow saving = sum of current payments − consolidation monthly payment
Assumptions
- Existing debts are paid at the stated monthly payment with no changes.
- No early repayment charges on existing debts.
- The consolidation loan covers all debt balances exactly.
- No secured consolidation is modelled — secured loans carry a different risk profile not captured here.
Data sources
No regulatory rate data is used directly. Note: secured debt consolidation (against property) is subject to FCA MCOB rules and carries the risk of losing your home — this calculator models unsecured consolidation only.
Limitations
- A lower monthly payment with a longer term may cost more in total interest — the calculator highlights both metrics so users can compare.
- Does not model early repayment charges on existing products.
- Does not distinguish between secured and unsecured consolidation.
Worked example
Two existing debts, proposed consolidation at 9.9% APR over 36 months.
Existing debts: Debt 1: £1,500 at 19.9% APR, £60/month → payoff 32 months, ~£380 interest Debt 2: £3,000 at 24.9% APR, £80/month → payoff 55 months, ~£1,380 interest Total existing interest: ~£1,760 over up to 55 months Consolidation loan (£4,500 at 9.9% APR, 36 months): r = 9.9% / 12 = 0.825% = 0.00825 Monthly = £4,500 × 0.00825 / (1 − 1.00825^−36) = £145 Total interest = (£145 × 36) − £4,500 = £720 Total cost = £5,220 Net saving: £1,760 − £720 = £1,040 Monthly change: rises from £140 to £145 (£5 more per month)
Changelog
| Date | Change |
|---|---|
| May 2026 | Initial publication |