🍁 Free Canadian Tool
Debt Consolidation Calculator Canada
Compare your current debts against a consolidation loan. See how much you could save on interest and lower your monthly payments.
Updated March 2026 • Works with credit cards, loans & lines of credit
💳 Your Current Debts
🏦 Consolidation Loan Details
%
months
📊 Consolidation Results
Monthly Savings
$127
per month with consolidation
Total Debt
$15,000
Interest Savings
$3,842
Current Payments
$512/mo
New Payment
$385/mo
Current Debts
Monthly Payment$512
Total Interest$8,247
Total Cost$23,247
Payoff Time45 mo
Consolidated
Monthly Payment$385
Total Interest$3,480
Total Cost$18,480
Payoff Time48 mo
✅ Consolidation Makes Sense! You could save $3,842 in interest and reduce your monthly payment by $127. This frees up cash flow while paying off debt faster.
How Debt Consolidation Works in Canada
Debt consolidation combines multiple debts—credit cards, personal loans, lines of credit—into a single loan with one monthly payment, typically at a lower interest rate. For Canadians carrying high-interest debt, consolidation can reduce total interest paid, lower monthly payments, and simplify finances by replacing multiple payments with just one.
This debt consolidation calculator helps you compare your current debt situation against a potential consolidation loan, showing exactly how much you could save in interest and how your monthly payment would change.
Types of Debt Consolidation in Canada
| Consolidation Option | Typical Rate | Best For | Requirements |
|---|---|---|---|
| Personal Loan | 7.99% - 14.99% | Good credit, unsecured debt | Credit score 650+, stable income |
| Line of Credit | 7.45% - 12.99% | Ongoing flexibility needed | Credit score 680+, income proof |
| Home Equity Loan | 5.99% - 8.99% | Homeowners with equity | Home ownership, 20%+ equity |
| HELOC | Prime + 0.5% to 2% | Homeowners, large debts | Home ownership, good credit |
| Balance Transfer Card | 0% - 3.99% promo | Short-term, disciplined payers | Good credit, pay within promo |
| Debt Management Program | 0% (negotiated) | Struggling to qualify for loans | Work with credit counsellor |
When Does Debt Consolidation Make Sense?
Debt consolidation is typically beneficial when:
- Your consolidation rate is lower: If your new rate is significantly lower than your current average rate (at least 2-3% lower), you'll save money.
- You can afford the payments: The new payment should fit comfortably in your budget.
- You won't rack up new debt: Consolidation only works if you don't add new debt on the cards you've paid off.
- Your credit is decent: You typically need a credit score of 650+ for good consolidation rates.
- You have multiple high-interest debts: Consolidating one low-rate debt doesn't make sense.
Average Personal Loan Rates in Canada (2026)
| Credit Score | Rate Range | Approval Likelihood |
|---|---|---|
| Excellent (760+) | 6.99% - 9.99% | Very High |
| Good (700-759) | 9.99% - 12.99% | High |
| Fair (650-699) | 12.99% - 19.99% | Moderate |
| Poor (600-649) | 19.99% - 29.99% | Low (subprime lenders) |
| Very Poor (below 600) | 29.99%+ or declined | Very Low |
Debt Consolidation vs Other Options
| Option | Impact on Credit | Pros | Cons |
|---|---|---|---|
| Consolidation Loan | Minimal (hard inquiry) | Lower rate, one payment, keep assets | Need decent credit, fees may apply |
| Consumer Proposal | Significant (R7 rating) | Reduce principal, legal protection | On credit report 3+ years |
| Bankruptcy | Severe (R9 rating) | Eliminate most debt | Lose assets, 6-7 years on report |
| Debt Management Program | Moderate (R7 notation) | Reduced rates, structured plan | Close credit cards, 3-5 year program |
| DIY (Avalanche/Snowball) | Positive over time | No fees, build discipline | Takes longer, requires willpower |
How to Apply for a Consolidation Loan in Canada
- Step 1: List all your debts with balances, rates, and monthly payments
- Step 2: Check your credit score (free through Borrowell, Credit Karma, etc.)
- Step 3: Calculate your total debt and ideal monthly payment
- Step 4: Compare offers from banks, credit unions, and online lenders
- Step 5: Apply with required documents (ID, income proof, debt statements)
- Step 6: Use loan funds to pay off existing debts immediately
- Step 7: Consider closing paid-off accounts or keeping them at zero balance
Canadian Lenders Offering Consolidation Loans
Major Canadian banks (TD, RBC, Scotiabank, BMO, CIBC) offer personal loans for debt consolidation. Credit unions often have competitive rates. Online lenders like Fairstone, LoanConnect, and Mogo may approve applicants with lower credit scores but at higher rates. Always compare multiple offers before accepting.
Frequently Asked Questions
Will debt consolidation hurt my credit score?
Initially, you may see a small dip due to the hard credit inquiry and new account. However, consolidation typically helps your score over time by lowering your credit utilization ratio and establishing a positive payment history. The key is making payments on time and not accumulating new debt.
Should I close my credit cards after consolidating?
Generally, no. Closing cards reduces your available credit, which can hurt your credit utilization ratio and score. However, if you can't resist using them, closing may be the smarter choice. A middle ground: keep cards open but remove them from your wallet or freeze them in ice.
What's the difference between secured and unsecured consolidation loans?
Secured loans require collateral (like your home or car) and offer lower rates because the lender has less risk. Unsecured loans don't require collateral but have higher rates. Home equity loans and HELOCs are secured; personal loans and lines of credit are typically unsecured.
How much can I consolidate with a personal loan?
Most Canadian personal loans range from $1,000 to $50,000. Some lenders offer up to $100,000 for well-qualified borrowers. Home equity options can go much higher depending on your equity. The amount you qualify for depends on your income, credit score, and debt-to-income ratio.
Is a home equity loan or HELOC better for consolidation?
Home equity loans offer fixed rates and payments—better for disciplined payoff. HELOCs have variable rates and revolving credit—better for flexibility but risky if you might re-borrow. Both put your home at risk if you can't pay, so consider carefully.
Can I consolidate debt with bad credit?
It's possible but challenging. Options include subprime lenders (higher rates), secured loans using collateral, co-signers, credit union membership, or debt management programs through a non-profit credit counsellor. Be wary of predatory lenders charging excessive fees.
What fees are associated with consolidation loans?
Common fees include origination fees (1-5% of loan amount), balance transfer fees (1-3%), annual fees, and prepayment penalties. Some lenders charge none of these. Always calculate the total cost including fees when comparing loans. A slightly higher rate with no fees may be cheaper overall.
Accuracy Commitment: This debt consolidation calculator uses standard amortization formulas and Canadian lending norms. Actual rates depend on your credit profile, income, and lender policies. This calculator is for educational purposes—consult a financial advisor or licensed credit counsellor for personalized advice.