Debt consolidation break-even
Not a lender · illustrative only.Figures are examples, not offers or advice.
Compare keeping up to three debts versus one consolidation loan — monthly change, total cost, fees and break-even month.
Methodology: how this is calculated · Last checked:
Your inputs
Existing debts (up to 3)
Debt 1
Debt 2
Debt 3
Consolidation loan
Results
Keep: monthly total
£260.00
Keep: months to clear
3 years 8 months
Consolidation monthly
£177.20
Monthly change
Negative means lower monthly outgo
-£82.80
Total cost to repay
- Keep current debts
- £9,559
- Consolidate (incl. fees)
- £8,656
- Difference
- £903 less to consolidate
Consolidation interest
£1,506
Interest saved (after fees)
£903
Fee break-even month
Months until fee is covered by monthly saving
2 months
Method: Capital-and-interest reducing balance; monthly rate = APR ÷ 12. Representative APR on UK credit ads may include fees — we model fees separately unless stated. Fee break-even ≈ fee ÷ monthly saving when the new payment is lower.
Most people next
Illustrative only — not personalised advice, not a credit offer, and not an FCA-regulated recommendation. LoanCalc Lab is not a lender or broker. Check the lender’s pre-contract information for the APR, fees and early settlement terms. Rates and fees change. Full calculator disclaimer.
How this is calculated
Step by step, exactly as the calculator above works it out. Nothing is sent to a server — the sums run in your browser.
- “Keep” path: each debt you enter is run month by month. Interest = balance × annual rate ÷ 100 ÷ 12; then that debt’s monthly payment is taken off, capped at the balance plus interest.
- This repeats for up to 600 months. If any balance is still above 1p at that point, the page warns that your current payments do not clear the debts.
- Keep total cost = the balances you entered + all interest charged along the way. Keep monthly total = the sum of the payments you entered.
- “Consolidate” path: the new loan amount is amortised at the new rate and term with the standard reducing-balance payment. Consolidate total cost = all payments + the fee.
- Interest saved = keep interest − new-loan interest − fee. A negative figure means consolidating costs more overall.
- Break-even month = fee ÷ monthly saving, rounded up, when the new payment is at least 1p lower. With no fee and no increase in the payment it shows month 0; if the new payment is higher there is no break-even.
Equations & assumptions
Keep path: simulate each debt with its minimum payment until cleared. Consolidation path: standard amortising loan on the consolidation principal. Fee break-even ≈ fee ÷ monthly saving when the new payment is lower. Total cost = principal paid + interest (+ fees on the consolidation path).
- Capital-and-interest reducing balance; monthly rate = APR ÷ 12. Representative APR on UK credit ads may include fees — we model fees separately unless stated.
- No early repayment charges modelled on existing debts.
- Debts with zero balance or zero payment are ignored.
Using this calculator well
When to use it
Use this when you are thinking of rolling several debts, such as cards and an older loan, into one new loan. It compares what you would pay on the debts as they stand with the new loan's payments and fees, and shows whether, and when, consolidation starts to save money. It is most revealing when the new loan has a longer term than your current debts, because a lower monthly payment can still mean more interest overall.
Common errors to avoid
- Using card minimum payments for today's debts; enter what you actually pay each month.
- Leaving out the new loan's fee, or a 0% balance-transfer period that is about to end.
- Assuming the cards will be closed. If the limits stay open and are used again, the saving disappears.
- Stretching the new term just to lower the payment, then comparing monthly figures instead of totals.
- Overlooking the 14-day withdrawal right: if the new loan's terms disappoint once you read the agreement, you can usually withdraw, repaying the money plus interest for the days you held it.
UK traps and limits to check
- Longer term, higher cost. A lower monthly figure often comes from a longer term. MoneyHelper’s debt consolidation guide suggests checking that the total payable is lower and that fees do not wipe out the saving.
- Secured “homeowner” loans. Consolidating unsecured debts into a loan secured on your home puts the home at risk if repayments are missed. This calculator assumes an unsecured personal loan.
- Early settlement fees. On most regulated UK personal loans you can repay part or all of the loan early (Consumer Credit Act 1974, s94). On a fixed-rate loan the lender may charge compensation, capped at 1% of the amount repaid early (0.5% if 12 months or less remain), and generally only where early repayments exceed £8,000 in a 12-month period. The rebate rules sit in the Consumer Credit (Early Settlement) Regulations 2004; MoneyHelper explains them in plain English in repaying a personal loan early. Ask the lender for a settlement figure rather than relying on any schedule.
- Credit score. Eligibility checkers use a soft search that other lenders cannot see; a full application leaves a hard search on your credit file. Several hard searches close together can make the next lender more cautious. See MoneyHelper on hard and soft credit checks. The rate you are finally offered may not be the advertised representative APR, which only 51% of accepted applicants must receive.
- Reusing cleared cards. If paid-off cards are used again, the comparison no longer holds. If you are already behind, free debt advice may be a better first step — MoneyHelper’s debt advice locator lists free services.
General information only, not advice. LoanCalc Lab is not a lender or broker and does not recommend borrowing.
Notes & FAQs
How do I map several debts into this tool?
Enter each existing balance, its rate, and the contractual or minimum payment you actually make. For the new loan, enter the amount you would borrow (usually the sum of balances plus any fee rolled in), the offered rate, term and fee.
What is the consolidation fee trap?
A lower monthly outgoing can still raise lifetime cost when a fee and a longer term are added. EXAMPLE: £3,200 at 29.9% (24 months left) and £5,400 at 18.9% (36 months left) versus £8,600 at 14.9% over 48 months with a £200 fee can cut the monthly figure and still lose on total interest.
What is the break-even result not?
Not debt advice, not a credit offer, and not a promise that leftover balances will be cleared. If the new loan is smaller than the debts you meant to repay, the leftovers still cost interest.
When should I not use this consolidation calculator?
Do not use it to decide secured borrowing, IVA or bankruptcy options, or whether to ignore priority debts (rent, council tax, utilities). Those need regulated advice channels, not this illustrative tool.
Should the consolidation amount equal the sum of balances?
Usually yes (plus any fees rolled in). Enter the actual loan you would take. A longer term can cut the monthly payment while increasing total interest.
Why might keeping the debts win on lifetime cost?
If you already have short remaining terms, stretching into a longer consolidation loan can add many months of interest even at a lower headline rate — especially once the fee is counted.
Does a lower new monthly payment mean I should consolidate?
Not by itself. Compare lifetime cost and months to clear as well. A cheaper instalment funded by a longer term is often the expensive path.
What if I cannot clear every balance with the new loan?
Model only the debts you would actually repay, and keep paying the leftovers. Under-borrowing is a common way consolidation “savings” disappear.
What if the new loan amount is less than the debts I owe?
The keep path still counts every debt you entered, but the consolidate path only counts the new loan. Leave out any debt you are not replacing, or the comparison will flatter consolidation.
Does break-even here mean I have saved money overall?
No. Break-even only shows how many months of lower payments it takes to cover the fee. Look at total cost and interest saved for the lifetime picture — a longer new term can recover the fee quickly and still cost more in the end.
Related tools & guides
Who the break-even calculator is for
Use it when several unsecured balances might be replaced by one new loan. The question is not “is the new monthly payment lower?” It is “after the fee and the new term, is lifetime cost lower?” Not debt advice.
Enter each existing debt (balance, rate, remaining term or payment) and the proposed loan including any fee. If the new amount is smaller than the debts you would repay, leftover balances still cost interest.
Case study: three cards and a £7,000 loan offer
A borrower has three debts: £3,500 at 22.9% paying £120 a month, £2,000 at 18.9% paying £80, and £1,500 at 15.9% paying £60 — £260 a month in total. Kept as they are, the calculator shows them clearing in 44 months with about £2,559 interest, a total cost of about £9,559.
An illustration offers £7,000 at 9.9% over 48 months with a £150 fee. That is £177.20 a month and about £1,506 interest, so the total cost is about £8,656 and interest saved after the fee is about £903. The lower payment recovers the fee in month 2.
The term changes the picture. Stretched to 60 months, the payment drops to £148.39 but the saving shrinks to about £506. Shortened to 36 months, the payment is £225.54 — still under the current £260 — and the saving grows to about £1,289. At 48 or 60 months the new loan also runs longer than the 44 months the current payments need. And none of this holds if the cleared cards are used again.
Read consolidation break-even. Related: snowball vs avalanche, APR / true cost. Disclaimer.
Edge cases
If current minimum payments never clear the existing debts, the tool shows a warning instead of a “keep” total. A zero or negative consolidation amount, a negative balance, payment or fee, or a consolidation rate outside 0–50% shows a message. A consolidation term longer than your current plan can lower the monthly figure while raising total interest.
Sources for product-norm wording only: MoneyHelper — credit; FCA consumer credit. Case-study figures are EXAMPLES produced by this calculator’s own code, not a quote or an offer. Last checked 24 October 2026.