Why the rate matters
Consolidating only saves money if the new loan costs less in total than your existing debts. The rate you're offered depends on your credit history, so it can be higher than advertised.
Interest is worked out each month on the balance you still owe, at one twelfth of the annual rate. Early payments are mostly interest; as the balance falls, more of each payment repays the loan.
Worked example
A £15,000 consolidation loan at 9% over 5 years costs £3,682.52 in interest. At 20%, the same loan would cost £8,844.50 in interest, more than twice as much.
Before you consolidate
Compare the total interest here with what you'd pay by keeping your current debts, and check for early repayment charges on them. Free debt advice is available from MoneyHelper.
Inputs for the debt consolidation loan interest rates calculator
Amount to borrow
The total needed to clear the debts you're consolidating.
Interest rate (per year)
The annual interest rate on your consolidation loan. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over. A longer term means paying interest for longer.
CALCULATOR QUESTIONS
Debt consolidation loan interest rate calculator questions
Will consolidating save me interest?
Only if the new loan's total interest is less than your current debts would cost. Compare totals, not just monthly payments.
What rate will I get?
It depends on your credit history. Use the rate from your own quote.
Why do I pay more interest at the start?
Interest is charged on the balance you owe, which is highest at the start. As you repay, the balance falls and so does the interest.
Where can I get free debt advice?
MoneyHelper can point you to free, confidential debt advice.