Calculate the weighted average interest rate across multiple loans or debts. Perfect for debt consolidation planning and understanding your true cost of borrowing.
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A blended interest rate (also called a weighted average interest rate) is the effective interest rate you pay when you have multiple loans or debts with different interest rates and balances. It represents the true cost of borrowing across all your loans combined.
This calculation is essential for understanding your overall debt situation, especially when considering debt consolidation, refinancing, or comparing different loan options.
The blended rate gives you a single number that represents the average interest rate across all your loans, weighted by the size of each loan. This makes it easier to compare consolidation options and make informed financial decisions.
The blended rate formula calculates a weighted average based on each loan's balance and interest rate:
Blended Rate = Σ (Rate × Balance) / Σ Balance
Rate = Interest rate for each loan (as a decimal)
Balance = Outstanding balance for each loan
Σ = Sum of all loans
Our blended rate calculator automatically applies this formula to give you an accurate weighted average interest rate.
Loan 1: $5,000 at 18% APR
Loan 2: $3,000 at 15% APR
Loan 3: $2,000 at 12% APR
Blended Rate: 16.05%
Total Balance: $10,000
Mortgage: $200,000 at 4.5% APR
Car Loan: $25,000 at 6.0% APR
Personal Loan: $10,000 at 8.0% APR
Blended Rate: 4.89%
Total Balance: $235,000
Calculate your current blended rate to compare against consolidation loan offers. If a consolidation loan offers a rate lower than your blended rate, it may save you money.
Understanding your blended rate helps you budget for interest payments and plan your debt payoff strategy more effectively.
When considering multiple loan options, calculate the blended rate for each scenario to see which combination offers the best overall rate.
Use your current blended rate as a benchmark when evaluating refinancing options to ensure you're getting a better deal.
A simple average rate treats all loans equally, while a blended rate weights each loan by its balance. A blended rate is more accurate because larger loans have more impact on your total interest cost.
Not necessarily. Consider fees, loan terms, and whether you'll lose benefits (like credit card rewards). Calculate the total cost over the loan term, not just the interest rate.
Yes, as you pay down loans, the weights change. Loans with higher balances will have more influence on your blended rate. Recalculate periodically to track changes.
Yes! Blended rate can also calculate the weighted average return on a portfolio of investments, helping you understand your overall portfolio performance.
Paying off a loan removes it from the calculation. If you pay off a high-rate loan, your blended rate will decrease. If you pay off a low-rate loan, your blended rate may increase.
Use our blended rate calculator to understand your true cost of borrowing across all your loans. Make informed decisions about debt consolidation and financial planning.
