Consolidation Loan Comparison
Compare keeping your debts against rolling them into one loan — at the same monthly outlay, with fees included.
Your debts
Commonly 1–8% of the loan amount.
Equal-outlay comparison
Consolidating costs less by about
$2,867
The loan ($12,400 at 12%) pays $412/month for 3 yr — $2,427 in interest and fees. Paying your existing debts that same $412/month in avalanche order finishes in 3 yr 6 mo with $5,294 of interest. Same money out the door, so the totals are comparable.
- Loan payment (both paths pay this)
- $412/mo
- Loan: time / interest + fees
- 3 yr · $2,427
- Keep debts: time / interest
- 3 yr 6 mo · $5,294
View data table
| Interest + fees | |
|---|---|
| Consolidation loan | $2.4K |
| Keep debts (avalanche) | $5.3K |
The non-math failure mode
Consolidation fixes the rate, not the habit. If the cleared cards get used again, you end up with the loan AND new balances. Pair any consolidation with cards frozen, closed, or removed from your wallet.What this may mean for you
A consolidation wins when the rate drop is large enough to beat its fee inside a term that isn't longer than your own payoff would have been. It loses quietly when a "lower rate" is stretched over extra years — which is exactly what the equal-outlay comparison above is designed to catch.
Results are estimates for educational purposes and may not reflect your complete financial or tax situation.
Understanding this calculator
Consolidation succeeds or fails on two numbers most ads skip: the origination fee (commonly 1–8% of the loan, often deducted up front) and the term. A lower rate stretched over more years can cost more than the debts it replaced — so this comparison holds your monthly outlay equal on both paths and lets the totals speak.
The other failure mode isn't mathematical: cards that get consolidated and then charged up again. A consolidation loan fixes the interest rate, not the spending pattern — pair it with closed or frozen cards or the math resets against you.
Assumptions and methodology
- Loan path: your combined balances (plus the fee, when financed) amortized at the loan's APR and term.
- Keep path: the same total monthly payment applied to your existing debts in avalanche order (highest APR first).
- The interest difference compares total interest on the two paths at that equal outlay. Consolidating is not automatically beneficial — fees and longer terms can outweigh the rate cut.
Official sources
Last reviewed August 30, 2026. Year-specific figures show their tax or data year in the tool; data is reviewed when the IRS, SSA, and CMS publish annual updates.
Common questions
The loan's rate is lower but it still loses. How?
Usually the term: five more years of a 'cheaper' rate can exceed the interest of a faster avalanche payoff. The equal-outlay comparison makes that visible.
Keep going
- Snowball vs. AvalancheBuild a payoff plan across all your debts and compare the avalanche and snowball methods.Calculator
- Debt-Free DateEnter every debt and one extra monthly amount — get the calendar date you're done, debt by debt.Calculator
- Credit Card PayoffFind your payoff date at any monthly payment — or the payment that clears the card by a date you choose.Calculator
Want a second set of eyes on this?
If you'd like to talk through what these numbers mean for your situation, you can schedule a free, no-pressure conversation. No products, no pitch — just questions answered.