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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!
Definitions
- 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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