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Debt Consolidation Calculator
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Should you consolidate your debt? This calculator is designed to help determine
if debt consolidation is right for you. Fill in your loan amounts, credit card balances
and other outstanding debt. You can then see what your monthly payment would be
with a consolidated loan. Try adjusting your terms, loan types or rate until you
find a consolidation plan that fits your needs - and most importantly your budget!
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Definitions
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- Loan amount owed
- Loan amount owed is the total remaining balance on a
loan. If you are uncertain of your exact balance, enter an estimate that is as close
as possible.
- Loan payment
- The payment amount is your current monthly payment.
- Loan months left
- The number of months you have left to make payments on
a loan.
- Credit card balance
- The outstanding balance on your credit card. You do
not need to include finance charges; they will be calculated based on your interest
rate.
- Credit card rate
- Annual interest rate you pay on outstanding credit card
balances. This calculator assumes simple interest is charged every month at 1/12th
of your annual rate.
- Credit card payment
- Credit card payments are based on your outstanding
balance and annual interest rate. For this loan comparison, the monthly payment
is the amount required to pay off your credit card in the same number of months
as your consolidation loan. Your actual credit card payment may be lower, but will
often require many more payments.
- Interest rate
- Annual interest rate for your new consolidation loan.
- Term in months
- Number of months for your new consolidation loan.
- Up front costs
- Any fees you are required to pay up front to receive this
loan. This could include appraisal fees, loan origination fees, etc.
- Points
- Number of points paid for this loan. Points are usually only paid
for home equity loans.
- Rate earned on savings
- This is the rate you would have received if you
had put your closing costs into savings. Enter your short term savings rate. For
most people this is currently 2% to 5% annually. Savings accounts at a bank or credit
union pay as little as 2% or less.
- Income tax rate
- This is your combined federal and state income tax rates.
It is used to determine income tax savings when you use a home equity loan to consolidate
your debt.
- Loan type
- The two most common loan types, home equity and personal, differ
in fees, rates and tax deductibility of interest. Home equity loans often have higher
fees, but usually have lower rates and a tax deduction for interest paid. Personal
loans do not have a tax deduction for interest paid, and have a higher interest
rate but often have lower fees. These are important considerations when choosing
a loan.
- Include closing costs in loan
- If you include your closing costs in your
loan, your loan balance, monthly payment and total interest paid will increase.
You will, however, be required to pay less money up front. Including your closing
costs in your loan may be a good option if you do not have funds available, or you
can achieve a relatively high rate of return on your savings.
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Information and interactive calculators are made available
to you as self-help tools for your independent use and are not intended to provide
investment advice. We can not and do not guarantee their applicability or accuracy
in regards to your individual circumstances. All examples are hypothetical and are
for illustrative purposes. We encourage you to seek personalized advice from qualified
professionals regarding all personal finance issues.
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