Debt Consolidation Calculator

How the Debt Consolidation Calculator Works

Debt consolidation replaces several separate credit agreements with a single loan - ideally at a lower average interest rate or over a longer term - to reduce your monthly outflow and simplify repayments. The calculator does two things in parallel:

South Africans commonly consolidate credit card debt (which can carry rates of 20–22% per year), clothing and furniture store accounts (often 24–28%), and small personal loans into a single personal loan or home equity loan at a lower rate. The saving is genuine only when the consolidation rate is meaningfully lower than the weighted average rate of existing debt.

Beware of extending the term too aggressively: a lower monthly payment over many more years can result in paying far more total interest even at a lower rate. The calculator makes this trade-off visible.

How to Use This Calculator

1. 1

   List each debt

   Add every debt you want to consolidate - credit cards, store accounts, vehicle finance, or personal loans. For each one, enter the outstanding balance, annual interest rate, and remaining term in months.

2. 2

   Check your current totals

   The calculator immediately shows your combined monthly repayments and the total interest remaining on all debts if you continue paying as-is.

3. 3

   Enter the consolidation loan details

   Input the interest rate you have been offered (or expect to qualify for) and your preferred repayment term. The principal will equal the sum of your outstanding balances.

4. 4

   Compare the outcomes

   Review the side-by-side comparison: monthly payment difference, total interest difference, and the total savings or extra cost. A positive saving confirms consolidation is worthwhile at those terms.

5. 5

   Factor in costs

   Remember to account for the consolidation loan's initiation fee, any early settlement penalties on existing debts, and monthly service fees. The calculator includes these in the final comparison.

Frequently Asked Questions

Will debt consolidation hurt my credit score in South Africa?

Applying for a new consolidation loan creates a hard enquiry on your credit record, which may temporarily lower your score by a few points. However, once you use the consolidation loan to pay off multiple accounts (reducing your credit utilisation and the number of active accounts), your score often improves over 3–6 months. The key is to close the paid-off accounts rather than accumulating new debt on them.

Can I use a home loan to consolidate debt in South Africa?

Yes - accessing equity in your property through a home equity loan or by increasing your bond is one of the cheapest consolidation options, since home loan rates are typically prime-linked (currently around 10.25%). However, this converts unsecured debt into secured debt. If you miss repayments, your home is at risk. It also spreads short-term debt over a 20-year term, which can drastically increase total interest even at a lower rate.

What is a debt review and is it the same as consolidation?

No. Debt review (also called debt counselling) is a formal legal process under the NCA administered by a registered debt counsellor. It restructures your debt with court oversight and protects you from creditor action while you repay. Debt consolidation is simply taking out a new loan to pay off existing ones. Debt review is typically for consumers who cannot afford their current repayments; consolidation is for those who can afford repayments but want to simplify and potentially save on interest.

Are there fees for settling credit cards or store accounts early?

Credit cards and revolving credit facilities generally have no early settlement penalty since they are not term loans. Fixed-term personal loans and vehicle finance agreements may carry a settlement penalty of up to 3 months' interest if settled within the first 12 months of the agreement. Request a settlement letter (called a settlement balance) from each creditor to get the exact amount needed to close the account.

What is a good debt-to-income ratio in South Africa?

The NCA requires lenders to assess affordability - South African financial guidance generally suggests keeping total monthly debt repayments below 30–35% of your gross monthly income. If your ratio exceeds 40–45%, you are considered over-indebted. Consolidation can help bring this ratio down by reducing the monthly payment, but it only solves the affordability problem if new debt is not accumulated.

Which debts should I not consolidate?

Interest-free store account promotions, low-rate employer loans, and subsidised government loans should generally not be consolidated into a market-rate personal loan. It is also usually unwise to consolidate vehicle finance or a home loan into an unsecured personal loan, as personal loan rates are higher. Focus consolidation on the highest-rate revolving credit: credit cards, store accounts, and high-rate short-term loans.