Formula
For each current debt, monthly interest is the remaining balance multiplied by the annual rate divided by 12. The payment then reduces principal. The debts run together, so the current timeline is the longest individual payoff.
New balance = current balances + financed fee
The new payment uses the standard fixed-rate amortization formula over the term you choose. Interest saved is current total interest minus the new loan’s total interest.
Assumptions
- Each current debt keeps its own fixed monthly payment.
- The debts are paid during the same months, so the current plan ends with the slowest debt.
- The new loan replaces every listed balance.
- Any fee entered is financed by adding it to the new loan balance.
- Rates stay fixed, and prepayment penalties, taxes, and late fees are not included.
Worked example
Three debts totaling $12,300.00 currently require $455.00 per month and take 3 years 3 months to clear. Their combined interest is $3,836.25. Replacing them with a 8.5% loan for 3 years has a payment of $388.28 and interest of $1,678.10. That saves $2,158.15.
Input definitions
- Current balance and payment
- The amount still owed and the amount paid toward that debt every month.
- New loan term
- Years plus up to 11 months, from 1 to 600 months total.
- Financed fee
- A one-time cost added to the amount borrowed. Zero means the new loan equals the listed balances.
Limitations
This is an estimate, not a loan offer or financial advice. A lender may decline the new loan, price it from a credit check, or apply a fee differently. Introductory rates, variable rates, and skipped payments need a different calculation.
Questions
What does this comparison include?
It compares the interest and time of continuing every listed payment with the interest and payment of one new fixed-rate loan. The new loan balance is the sum of the current balances plus any fee you choose to finance.
Why can a lower rate still cost more?
A longer repayment term can add more months of interest than the lower rate removes. Compare both the monthly payment and the total interest before choosing the new loan.
Are lender fees and penalties included?
Only the optional fee you enter is included, and it is added to the new loan. Balance-transfer fees charged differently, late fees, prepayment penalties, and taxes are not modeled.
Does the currency selector convert the debts?
No. It changes the currency symbol and number format only. It does not apply an exchange rate.