Does a longer consolidation term cost more?

Only if you take the lower payment it allows. If you keep paying your current total, the same money clears the same principal at the same time whatever the term says, the calculator asserts this directly. The term matters because a smaller required payment is an invitation to pay less, and that is where the cost appears.

How does the origination fee work?

It is deducted from the loan before you receive it, so you borrow more than your debts to end up with enough. At 5% on $19,000, you borrow $19,950 and pay interest on the extra $950 for the whole term. A fee-free loan at a slightly higher rate is often the better deal, which you can test by setting the fee to zero and raising the rate.

Is consolidating better than a balance transfer?

They suit different situations. A 0% balance transfer is cheaper if you can clear most of the balance inside the promotional window; a consolidation loan gives a longer fixed term at a rate above zero but below a card. Run both, the transfer usually wins on smaller balances you can clear quickly.

What if I do not consolidate at all?

Paying highest-rate-first with the same budget is the comparison plan here, and it is free. Snowball versus avalanche shows what ordering alone achieves. If the rate improvement is thin, ordering your existing debts properly captures most of the benefit without any fee.

Will consolidating hurt my credit score?

Usually not much, and often it helps. A new account adds a hard inquiry and lowers your average account age, but clearing revolving balances improves your utilisation ratio, which carries more weight. This calculator does not model any of it, because the interest at stake is far larger than the scoring effect.

Is a Debt Consolidation Loan Worth It?

Is a debt consolidation loan worth it? Only if the rate improvement beats the origination fee, and only if you keep paying what you pay now. The lower monthly payment it offers usually comes from a longer term, and taking it is what turns a cheaper rate into a more expensive debt.

Example numbers

The verdictfrom an example

Worth doing, consolidating saves $1,457, provided you keep paying $700 a month rather than dropping to the new minimum.

Worked on $19,000 across three debts, consolidated at 11.9% with a 5% fee. Change anything below to use yours.

Consolidating saves: $1,457
Your blended rate now: 19.69%
Origination fee: $950

The figures behind it

Consolidating saves: $1,457; Against paying the debts down highest-rate-first on the same budget, fee included.
Your blended rate now: 19.69%; Weighted by balance. The new loan has to beat this by enough to cover a 5.0% fee.
Origination fee: $950; On $19,000 of debt, so you actually borrow $19,950.
Debt free, consolidated: 2 years, 10 months; Paying $700 a month, the same as now.
Debt free, paying direct: 3 years; Avalanche order, paying $6,020 of interest.
If you take the lower payment: +$3,003; Dropping to the loan's own $442.77 payment stretches it to 5 years and costs this much more.

What consolidating costs$4,563

79%

21%

Interest on the new loan$3,613
Origination feeDeducted before you receive the money, so you borrow it too.$950

What you owe on each plan

Years from today

Consolidated, same budgetPaying direct, highest rate firstConsolidated, taking the lower payment

Payment scheduleShow

The table scrolls sideways

Item	Paying direct	Consolidated
Total balance	$19,000	$19,000
Origination fee	$0	$950
Amount borrowed		$19,950
Rate	19.69%	11.90%
Monthly payment	$700	$700
Interest paid	$6,020	$3,613
Total cost	$6,020	$4,563
Months to clear	36	34

What this result assumes

Both plans spend the same $700 every month, so neither can win by quietly paying more.
The origination fee is deducted from the loan before you receive it, so the amount borrowed is the debt plus the fee, and you pay interest on the fee for the whole term.
The comparison plan pays the existing debts highest rate first, which is the cheapest order available without borrowing anything. Comparing consolidation against paying minimums only would flatter it enormously.
The third line on the chart is the case worth watching: consolidating and then taking the lower payment the new loan allows. Keeping your current budget makes the term almost irrelevant; dropping to the minimum is where a longer term does its damage.
A consolidation loan closes nothing. If the cards stay open and get used again, you have added a loan rather than replaced the debt, which is the most common way this goes wrong and is not something a calculator can model.

Methodology

Reviewed September 1, 2026

What consolidation actually changes

A consolidation loan replaces several balances with one. It changes three things: the rate, the term, and the number of due dates. Only the first of those is unambiguously good, and it has to be good enough to cover a fee that is charged before you see any of the money.

The fee is the part most comparisons omit. An origination charge of 1% to 8% is deducted from the proceeds, so to clear $19,000 of debt at a 5% fee you borrow $19,950 — and pay interest on that extra $950 for the whole term. The rate has to beat your current blended rate by enough to earn the fee back.

The comparison here is against paying the existing debts down highest-rate-first, on the same monthly budget. That matters: comparing consolidation against paying only minimums would flatter it enormously, because almost anything beats paying minimums.

The term is a trap only if you take the lower payment

Writing this calculator turned up something worth stating plainly. If you consolidate and keep paying what you pay now, the loan’s contractual term is almost irrelevant — the same money against the same principal at the same rate clears it at the same time whether the paperwork says 60 months or 84. The test suite asserts exactly that.

The term only bites if you drop to the new loan’s own required payment, which is precisely what a lower monthly payment invites you to do. That is the whole sales pitch, and it is where a better rate turns into a more expensive debt.

So the chart carries three lines rather than two: paying direct, consolidating and keeping your budget, and consolidating and taking the lower payment. The gap between the second and third is the cost of accepting the offer as pitched.

What no calculator can model

Consolidation closes nothing. The cards it pays off remain open, with their limits restored and their balances at zero. If they get used again, you have not replaced the debt — you have added a loan to it, and you now owe both.

That is the most common way this goes wrong, and it is behavioural rather than arithmetic, so nothing here captures it. If you consolidate, the discipline the loan needs is not making the payment; it is leaving the cleared cards alone.

The other omission is your credit. A new loan means a hard inquiry and a lower average account age, but paying off revolving balances usually improves utilisation, which counts for more. The net effect is generally mildly positive and rarely decisive next to the interest at stake.

Assumptions

Both plans spend the same amount each month: every existing minimum plus your extra.
The comparison plan pays the existing debts in avalanche order, highest rate first.
The origination fee is deducted from the loan proceeds, so the amount borrowed includes it.
The consolidation loan is fixed rate with a level payment and no prepayment penalty.
Existing minimum payments are held constant, though a card minimum falls as its balance does.
No new spending is added to any account, and the cleared cards are never used again.
Any effect on your credit score is excluded.
The rate entered is the rate you have been quoted, not an advertised range.

Sources

Common questions

Is a debt consolidation loan worth it?: Only if the new rate beats your current blended rate by enough to cover the origination fee, and only if you keep paying what you pay now. On the default figures, three debts blending to about 19.5%, consolidated at 11.9% with a 5% fee, it saves money. Narrow the rate gap or widen the fee and it stops.
Does a longer consolidation term cost more?: Only if you take the lower payment it allows. If you keep paying your current total, the same money clears the same principal at the same time whatever the term says, the calculator asserts this directly. The term matters because a smaller required payment is an invitation to pay less, and that is where the cost appears.
How does the origination fee work?: It is deducted from the loan before you receive it, so you borrow more than your debts to end up with enough. At 5% on $19,000, you borrow $19,950 and pay interest on the extra $950 for the whole term. A fee-free loan at a slightly higher rate is often the better deal, which you can test by setting the fee to zero and raising the rate.
Is consolidating better than a balance transfer?: They suit different situations. A 0% balance transfer is cheaper if you can clear most of the balance inside the promotional window; a consolidation loan gives a longer fixed term at a rate above zero but below a card. Run both, the transfer usually wins on smaller balances you can clear quickly.
What if I do not consolidate at all?: Paying highest-rate-first with the same budget is the comparison plan here, and it is free. Snowball versus avalanche shows what ordering alone achieves. If the rate improvement is thin, ordering your existing debts properly captures most of the benefit without any fee.
Will consolidating hurt my credit score?: Usually not much, and often it helps. A new account adds a hard inquiry and lowers your average account age, but clearing revolving balances improves your utilisation ratio, which carries more weight. This calculator does not model any of it, because the interest at stake is far larger than the scoring effect.

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