Getting a consolidation loan can do more than payoff your debt. You can create a sizeable nest egg by investing all or a portion of your monthly payment savings. After a few years the results may surprise you! Use this calculator to see the results of paying off your debt and investing your payment savings.

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Definitions

Credit cards

Enter one total credit card debt and its average interest rate, or press the "Details" button to enter up to 10 credit card accounts, one on each line.

Car loans

Click on the "Details" button to enter any car loans you may have. The details page is designed to let you enter your current monthly payment, the term (in months), the starting balance and the number of months you have left. It then calculates your outstanding balance and interest rate. You can enter up to three loans.

Other loans

Click on the "Details" button to enter any other loans you may have in the details page. This page is designed to let you enter your current monthly payment, the term (in months), the starting balance and the number of months you have left. It then calculates your outstanding balance and interest rate. You can enter up to six loans.

Balances

Your total current balances for your credit cards, car loans and investment loans.

Interest rates

The average annual percentage rate you pay. This interest rate is calculated for each of the categories of debt you have including credit cards, car loans and other installment loans. For credit cards, the rate you enter is used to calculate the interest on all future credit card payments. The length of time to pay off this credit card may be much greater than calculated if you enter a low promotional interest rate that is only good for a short period of time.

Payment

This is your initial monthly payment. For credit cards, if you checked the "use credit card minimum payments" box on the details page, your monthly payment is calculated as 2% of your current outstanding balance. With the "use credit card minimum payments" box checked, your monthly payment will decrease as your balance is paid down. This can greatly increase the length of time it takes to pay off your credit cards. Uncheck this box to enter your own monthly payment that will remain the same until your balance is paid in full.

(We calculate your minimum monthly payment as 2% of your current outstanding balance. While your actual minimum monthly payment may be slightly different, say 3%, this is one of the most common methods used by credit card companies to calculate minimum payments.)

Loan balance

This is the total loan amount you are planning on receiving. This amount must be at least equal to your total outstanding debt plus any fees. If you choose to receive a larger loan amount than your outstanding debt, plus any fees, the additional amount is added to the starting balance of your investment.

Loan term

The length of time you will repay this loan. The investment timeframe for this calculator also uses the loan term. This can be from one to 30 years.

Loan interest rate

The annual interest rate you are charged for this loan. This calculator assumes that your payments are made monthly and that interest is compounded monthly.

Percent to invest

This is the percentage of your monthly payment savings you wish to invest. Any remaining payment savings is used to repay your loan. For example, if you have a monthly payment savings of $100 and choose to invest 75%, $75 would be invested and $25 would be an additional amount applied to your loan balance.

Rate of return

This is the annual rate of return you expect from your investment. The actual rate of return is largely dependent on the type of investments you select. ASX 300 has returned an average of 10.64% annually since inception. Savings accounts at a bank pay as little as 1% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.

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 can not and do not guarantee their applicability or accuracy in regards 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.



	Please note: Ausco Trading Pty Ltd takes no responsibility for the accuracy of this information. Personal Loans Australia.com.au makes all reasonable efforts to maintain accurate information. However all credit information should be used as a guide only. We urge users to check the terms and conditions on the specific credit applications when applying. You should check all costs related to any credit application with your financial adviser before making purchase decisions.