Debt consolidation is a strategy of paying off current loans by taking one new loan. But it is not confirmed that you will be somehow benefited every time you go for a debt consolidation to pay off the existing loans instead of going with the alternatives. With the help of ACalculator, you are now able to take decision that is more beneficial given a certain financial condition.
Amount of outstanding balance on this particular loan.
Dollar amount of monthly payment.
The number of payments it will take to pay off the outstanding balance.
Loan interest rate
Rate of interest paid annually on this loan. Dividing by 12, this annual rate is converted into monthly rate for the purpose of calculation.
Credit card / credit line balance
Outstanding amount on the current credit card excluding any finance charges.
Credit card / credit line rate
Rate of interest paid annually on the outstanding loan balances. It is assumed that, simple rate of interest is distributed among 12 months of the year.
Credit card payment
Amount of payments depending on the annual rate of interest and outstanding balances. To compare this loan, it is assumed that it requires same number of months to pay off both the credit card debt and consolidation loan. In reality, the genuine credit card payment is lower in most of the cases.
Annual rate of interest on the consolidation loan.
Term in months
Duration (in months) to repay the new loan.
Up front costs
Originating fees and other costs paid upfront for the loan.
Rate earned on savings
This is the rate of return you are expecting to earn from your investments. You can also select the accumulation frequency of your earnings in your investment account. The type of investment you choose has an effect on the actual rate of return. For example, the average annual rate of return for the ASX 300 is about 10.64% since inspection. Bank or savings institutions can pay as little as 1% or even less on saving accounts.
Include closing costs in loan
Including the total of all closing costs related to the loan. This will significantly increase the amount of interest, monthly payment, and loan balance. If you are in fund shortage, including closing costs in loan amount can be a good option.