APR (Annual Percentage Rate) is the fee-adjusted financial cost of a loan, including interest rate and fees expressed as an annual percentage. It provides a more accurate basis for comparing loans than the interest rate alone.

Why it matters: Two loans with the same interest rate may have different APRs due to fees. A lower APR means lower overall cost.

The calculator determines a blended APR representing the effective cost of all debts combined:

Example: Two debts totaling $17,500 with combined interest payments equals a specific blended APR representing your current debt burden.

Consolidation fees are upfront costs charged by the lender for processing the consolidation loan:

• Origination Fees: 1-5% of loan amount, charged for processing
• Points: 1 point = 1% of loan amount (optional)
• Closing Costs: Application, appraisal, title, inspection fees

Impact: Fees reduce the net loan proceeds or are added to the loan balance, increasing total cost.

Generally no, but consider these scenarios:

• Benefit: Simpler payments, better cash flow, reduced stress
• Cost: Higher APR increases total interest paid
• Consider: If consolidation improves your financial situation enough to justify higher costs

Recommendation: Only consolidate if APR is lower or the non-financial benefits significantly outweigh the cost.

Short-term: Yes, consolidation may temporarily lower your credit score due to:

• Hard inquiry (5-10 point decrease)
• New account (slightly lower average age)
• Hard inquiries from multiple lenders if you shop around

Long-term: Credit typically improves as you:

• Pay off debts (improves payment history)
• Lower credit utilization ratio
• Build good payment record on new loan

Can be consolidated:

• Credit card debt
• Personal loans
• Medical bills
• Other unsecured debts

Specialized consolidation:

• Federal student loans (Direct Consolidation Loan)
• Mortgages (can't consolidate with other debts)

Note: Secured debts (mortgages, auto loans) typically aren't consolidated with unsecured debts.

Debt Consolidation: Combines multiple different debts into one new loan

• Multiple creditors become one
• Simplifies payment management
• Often used for credit cards, personal loans

Refinancing: Replaces an existing loan with new terms

• Same debt, new loan terms
• May lower interest rate or change loan term
• Often used for mortgages, student loans

Savings depend on several factors:

• Interest Rate: Lower consolidation rate saves most
• Loan Term: Shorter term increases savings, longer decreases
• Fees: Reduce savings but often still worth it
• Your Debts: Higher existing rates = more potential savings

Example: Consolidating $24,000 in high-rate credit card debt ($18.92% APR) into a 10.99% APR loan could save $5,000+ in interest.