Debt consolidation calculator

It does one thing: it lowers the interest rate on what you owe. If you carry $25,000 across credit cards at 19.99%–22.99% and roll it into a single personal loan at, say, 12%, every dollar of every payment from then on attacks the balance harder because less of it is eaten by interest. The catch is the term: stretching a 3-year payoff into a 5-year loan at a lower rate can still cost more in total interest, even though the monthly payment drops. This calculator shows both numbers — monthly payment and lifetime interest — so you can see the real trade.

Usually only briefly. Applying triggers a hard inquiry (a few points, recovered within months), and a new account lowers the average age of your credit. But consolidation also cuts your credit-utilization ratio — paying off maxed-out cards with an installment loan often raises your score within a billing cycle or two, because revolving utilization weighs heavily and installment balances do not. The real danger is behavioural: if the freed-up cards get run back up, you have doubled the debt. Close or freeze them.

No — and confusing them is expensive. A consolidation loan repays 100% of what you owe at a lower rate; your credit takes a small, temporary dip. A consumer proposal is a legal insolvency process filed through a Licensed Insolvency Trustee that settles your debt for less than the full amount, but stays on your credit report for years. A loan is for people who can afford the payments at a better rate; a proposal is for people who genuinely cannot. If your minimum payments already do not cover the interest, you may be past the point a loan can help — see the warning sign this calculator flags below.

It is less about a single cutoff and more about the rate you are offered. The best unsecured personal-loan rates in Canada go to borrowers with strong credit (roughly 660+); below that, rates climb steeply and some lenders move you toward a secured loan against home equity. Always compare the offered APR against the blended rate you are paying now — if a lender quotes you 28% to consolidate cards at 21%, walk away. The federal criminal interest-rate cap is 35% APR, but "legal" is a long way from "worth it."

If your lender charges an origination or admin fee, you can usually pay it upfront or finance it. Financing it is convenient but means you pay interest on the fee for the whole term. This calculator lets you add a fee and includes it in the loan principal, so the savings figure you see is the honest, after-fee number — not the marketing one.