Debt Consolidation Calculator — Calculations & Slabs for FY 2026-27

Debt consolidation combines multiple high-interest debts (like credit cards, store cards, or personal loans) into a single loan with a single monthly payment. Ideally, the consolidation loan carries a lower interest rate than your weighted average rate, which reduces the total interest you pay and can help you pay off the debt faster.

It can. By securing a lower interest rate or stretching your repayment term over a longer period, you can reduce your monthly payment. However, if you choose a longer term, you might end up paying more in total interest over the life of the loan, even if the monthly rate is lower. Finding the right balance is key.

A weighted average interest rate reflects the actual interest rate you are paying across all your debts combined, relative to the balance of each debt. Calculating it allows you to see the real 'hurdle rate' you need to beat. If a consolidation loan's APR is lower than this weighted average, you will save money on interest.

Initially, you might see a small, temporary dip in your credit score due to the hard inquiry from the new loan application. However, in the long run, consolidating can improve your score by lowering your credit utilization ratio (since credit card balances are paid down to zero) and establishing a consistent payment history.

An origination fee is an upfront fee charged by lenders to process and package the loan, typically ranging from 1% to 8% of the loan amount. This fee is usually deducted from the loan proceeds or added to the principal balance. It is important to factor this fee into your calculations to ensure consolidation still saves you money.