Friday, April 4, 2008 

Debt Consolidation Calculator

How does a debt consolidation calculator work and why might you want to use it? First debt consolidation is an option anyone has to reduce their current debts. You can obtain a debt consolidation loan with excellent or bad credit. The specifics will vary, but the point is you will be able to find ways to save income or at least ease your stress and financial burden with debt consolidation. In order to find out whether debt consolidation is something that will work for you, you will need to calculate the cost of the process and the savings you are going to get.

A debt consolidation calculator online is going to help you determine your needs. If you plug in a loan amount you would like to have, the current interest, and the amount of time you are going to take to pay off that debt consolidation loan you will receive the monthly payments. You can also take this a step further. Below is an example.

Mr. Smith has three credit cards, a mortgage, car loan, student loans, utilities that add up to $200 a month, a grocery bill that is $400 a month, and an income of $3,000 a month. On the credit cards he has 13% interest, 20% interest, and 31% interest. The balances are $5000, $3000, and $2000. All the credit cards are above the 49% of the credit limit. The mortgage is a 30 year fixed with a 6.5% interest rate for the amount of $400,000. The car loan is 12% interest for $12,000 and the student loans are 3.5% interest for $20,000. Mr. Smith has recently been having trouble paying off his debts as well as buying food and paying the utilities. He isn't married so there is no additional income. At the moment he is trying to decide if bankruptcy or debt consolidation is an option. Using the debt consolidation calculator Mr. Smith can determine how much he is spending a month on the individual loans and expenses. He can also determine if there is some way to change his current spending for food and utilities.

Following the example you can see that using the debt consolidation calculator the individual can determine where he can best come up with a different option for the income he makes. In other words it is a pretty sure bet than any loans he can pay off or consolidate to make a lower overall monthly payment and combined interest rate is going to be the best option.

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