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Debt Consolidation Loan Calculator

It can be hard to stop and take a good look at your financial situation. We’re all so busy with life, work, and family that it’s understandable how we might want to put off dealing with debt. But if you’ve been thinking about debt relief, like consolidation or settlement, there’s no better time than now to prioritize your financial freedom. For an easy way to see how much money you could save—check out our free, online Debt Savings Calculator. You could also call 1-800-983-6693 or fill out our online form for a free, no-risk debt evaluation where our certified debt relief professionals can learn more about your needs and goals. 

How to Use Our Calculator?

Our Debt Savings Calculator is simple to use and can help you determine if debt consolidation or debt settlement might be better for you. To get started, you’ll need two pieces of information: how much debt you owe and your average interest rate (learn how to find your interest rate in this article: How to find interest rate on credit cards). Once these items are entered, you can get a side-by-side comparison of how much you could expect to pay to become debt-free through a debt consolidation program versus how much you could expect to save with a debt relief program through CreditAssociates.

What is Debt Consolidation? 

Debt consolidation is the process of combining all your debts with one new loan from a financial institution. Instead of continuing to make multiple monthly payments to various creditors, this new loan takes those existing debts and consolidates or combines all of them into one single payment.

Debt consolidation can be a great way to simplify your debts, but it does not help you with reducing the overall amount that you owe your creditors. This is because your debts are lumped into one payment, but there are no negotiations to reduce your debt. So, if you’re struggling to make your current payments or you’re looking to reduce the amount you owe, debt settlement might be a better option for you. Through a debt settlement program, you could reduce the amount you’re required to pay back by up to 50% or more. This means, you could get out of debt for less than you owe and also achieve a more affordable monthly payment.

How Does It Work?

Debt consolidation works by applying for a new loan and using it to cover existing debt. This new loan takes all of your existing debts and lumps them (or consolidates them) into one “new” debt. This new loan is then repaid over a specific period, typically up to 10 years. The benefit of this consolidation is that it simplifies your payments by only having to make one loan payment each month rather than making multiple monthly payments for all your debts.

Something important to keep in mind when considering a debt consolidation loan is that they can be harder to qualify for. Qualification and financing terms will be based on your credit score—so if you don’t have good credit or don’t qualify for an advantageous loan, debt settlement might be the better option for you (learn more about what makes a good credit score in this article: What is a good credit score?).

Ways to Consolidate Debt 

There are a couple of ways that you can consolidate your debt. One way, mentioned above, is to take out a new loan. Both debt consolidation loans and personal loans could be used to consolidate existing debts. Another common method, called a balance transfer, involves opening a new credit card and transferring existing debts onto the new card. You can learn more about ways to consolidate debt in these articles:
What is debt consolidation: is it worth it & should I do it?
Best balance transfer cards
Getting a loan to pay off credit cards

Debt Consolidation Alternatives

Before choosing the best debt relief solution for you, it’s important to consider all of your options. Here are three alternatives to debt consolidation to consider. You can also read more in this article: What are the best debt relief programs?.

Debt Settlement

Debt settlement is a negotiation process to lower the amount of debt you’re required to pay back. This means, creditors agree to settle your account for a lower amount than you owe—in many cases you could save up to half or more. Debt settlement companies specialize in negotiations with creditors and can use their experience and power to help you save even more money, time, and stress.

Use our Debt Savings Calculator to see how much you could save through debt settlement versus debt consolidation.

Bankruptcy

Filing for bankruptcy can be an effective way to stop wage garnishments and lawsuits from creditors. Two of the most common forms of bankruptcy for individuals are Chapter 7 and Chapter 13. Read more in this article: What are the different types of bankruptcies?. Bankruptcy is often regarded as a way to “erase” debt—but there are many tradeoffs to consider, including: forced liquidation of assets and long-term negative impact on your credit report (which could prevent you from qualifying for future purchases and loans). 

Budgeting

Budgeting basically means not spending more than you can afford. By tracking what you spend each month and having a plan to pay it off, you can prevent debt from piling up and the need for larger scale debt-relief solutions. However, if you simply cannot afford to pay back what you owe, budgeting might not provide enough help for your current situation. 

How Can CreditAssociates Help? 

If you’re looking to get out of debt, CreditAssociates can help! With a quick call, our debt relief experts can walk you through our process and help put you back on the path toward financial freedom today. 

Related Questions About Debt: 

Do debt consolidation loans hurt your credit score?

Debt consolidation loans are not designed to help improve your credit score, but many people find that their scores increase after obtaining a debt consolidation loan because they have reduced the number of accounts and balances on which creditors can report information. Continuing to make regular payments on your consolidation loan can also help your credit score.

What are average debt consolidation loan interest rates?

Debt consolidation rates can vary depending on your lender’s rates and your credit score. In general, someone with a credit score of 680 can expect an average APR for 2–5 year loans to come in at around 21%. It’s important to note that these loans can be harder to qualify for if you don’t have a good credit score—and if you do qualify, it might not be for the full amount you need. 

What is a good credit score?

A good credit score is considered above 680; the higher your credit score, the better interest rates you may be offered. Learn more in this article: What is a good credit score?.

What are the benefits of debt consolidation?

The main benefit of debt consolidation is that it helps simplify your financial situation by allowing you to pay off debt through a single monthly loan payment versus juggling multiple monthly payments to various creditors.

Is it smart to consolidate debt?

Consolidating debt can be a case-by-case decision. If you have good credit, you might qualify for an advantageous debt consolidation loan with a lower interest rate than your existing debts. But, if you don’t have good credit or are looking to get out of debt for less than you owe, debt settlement might be a better option for you. Read more here: Debt settlement vs. debt consolidation

Should I get a personal loan to pay off credit cards?

Getting a personal loan to pay off credit cards can be a good option if you qualify for a personal loan with a lower interest rate than your credit cards. Using a personal loan to pay off existing debts is very similar to a debt consolidation loan. But, if you need to get out of debt for less than you owe, this might not be the best option for you. 

What is the quickest way to get out of debt?

The quickest way to get out of debt will depend on your financial situation. Debt settlement is often one of the fastest options since it involves reducing the amount of debt you’re required to pay back. Reputable debt settlement companies could help reduce your debt by up to half, or more, and help you become debt-free in as little as 24 months.