Definitions
- Loan balance
- Loan balance is the total remaining balance on a loan. If you are uncertain of your exact balance, enter an estimate that is as close as possible.
- Loan payment
- The payment amount is your current monthly payment.
- Remaining payments
- The number of months you have left to make payments on a loan. This is calculated from the interest rate, monthly payment and current balance of the loan.
- Loan interest rate
- Annual interest rate for this loan. Interest is calculated monthly on the current outstanding balance of your loan at 1/12 of the annual rate.
- Credit card balance
- The outstanding balance on your credit card. You do not need to include finance charges; they will be calculated based on your interest rate.
- Credit card rate
- Annual interest rate you pay on outstanding credit card balances. This calculator assumes simple interest is charged every month at 1/12th of your annual rate.
- Credit card payment
- Credit card payments are based on your outstanding balance and annual interest rate. For this loan comparison, the monthly payment is the amount required to pay off your credit card in the same number of months as your consolidation loan. Your actual credit card payment may be lower, but will often require many more payments.
- Interest rate
- Annual interest rate for your new consolidation loan.
- Term in months
- Number of months for your new consolidation loan.
- Up front costs
- Any fees you are required to pay up front to receive this loan. This could include appraisal fees, loan origination fees, etc.
- Points
- Number of points paid for this loan. Points are usually only paid for home equity loans.
- Rate earned on savings
- This is the rate you would have received if you had put your closing costs into savings. Enter your short term savings rate. For most people this is currently 2% to 5% annually. Savings accounts at a bank or credit union pay as little as 2% or less.
- Income tax rate
- This is your combined federal and state income tax rates. It is used to determine income tax savings when you use a home equity loan to consolidate your debt.
- Loan type
- The two most common loan types, home equity and personal, differ in fees, rates and tax deductibility of interest. Home equity loans often have higher fees, but usually have lower rates and a tax deduction for interest paid. Personal loans do not have a tax deduction for interest paid, and have a higher interest rate but often have lower fees. These are important considerations when choosing a loan.
- Include closing costs in loan
- If you include your closing costs in your loan, your loan balance, monthly payment and total interest paid will increase. You will, however, be required to pay less money up front. Including your closing costs in your loan may be a good option if you do not have funds available, or you can achieve a relatively high rate of return on your savings.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regard to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
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