Blended Rate Calculator

Category: Investment
- April 22, 2025
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Calculate the combined (blended) interest rate when consolidating multiple loans or credit lines. This helps determine if refinancing or debt consolidation is beneficial.

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About Blended Interest Rates

A blended interest rate is the weighted average interest rate of multiple loans or credit lines. When considering debt consolidation or refinancing, understanding your blended rate helps determine if a new loan offer is truly beneficial.

When to Use a Blended Rate
  • Debt Consolidation: When combining multiple loans into a single new loan
  • Mortgage Refinancing: When combining a primary mortgage with a home equity loan
  • Student Loan Consolidation: When merging multiple student loans with different rates
  • Business Loan Analysis: When analyzing the effective cost of multiple business financing sources
Benefits of Knowing Your Blended Rate
  • Accurately compare consolidation offers against your current situation
  • Understand the true cost of your existing debt
  • Make informed decisions about which debts to pay off first
  • Evaluate if a debt consolidation loan actually saves you money
Example

If you have a mortgage with a $200,000 balance at 4% interest and a car loan with a $20,000 balance at 6% interest, your blended rate would be:

Blended Rate = ($200,000 × 4% + $20,000 × 6%) ÷ $220,000 = 4.18%

This means that if you're offered a consolidation loan at 4.1%, it would be beneficial, but if offered at 4.3%, you would actually pay more interest overall.

Blended Rate Formula:
Blended Rate = (Balance₁ × Rate₁ + Balance₂ × Rate₂ + ... + Balanceₙ × Rateₙ) ÷ (Balance₁ + Balance₂ + ... + Balanceₙ)

What Is the Blended Rate Calculator?

The Blended Rate Calculator helps you determine the combined interest rate when you merge multiple loans or credit lines into one. This is especially useful if you're considering refinancing or debt consolidation and want to know whether a new loan offer is truly beneficial compared to your current obligations.

How It Works

This financial planning tool calculates the weighted average interest rate based on each loan's balance and interest rate. Larger loans influence the final blended rate more than smaller ones. By using this interest estimator, you get a clearer view of your true average borrowing cost.

When to Use This Calculator

  • You're planning debt consolidation and want to compare rates.
  • You're considering refinancing a mortgage or student loans.
  • You're merging business loans and need to understand overall costs.
  • You want a loan assessment before committing to a new financial product.

Why It's Useful

Knowing your blended interest rate helps you:

  • Make informed decisions about refinancing or consolidation options.
  • See the true cost of your debt, especially when rates vary.
  • Use it alongside other tools like an interest rate tool, loan cost breakdown, or investment planner to plan effectively.
  • Understand how each loan contributes to your total interest costs.

How to Use the Calculator

  1. Enter each loan’s name, balance, and interest rate.
  2. Click "Add Another Loan" to input more loans.
  3. Choose how many decimal places to show for the results.
  4. Select whether to display step-by-step calculations and visual charts.
  5. Click "Calculate Blended Rate" to get your results.
  6. Review the blended rate, total balance, yearly interest, and loan breakdown.

Example

If you have two loans:

  • Loan A: $200,000 at 4%
  • Loan B: $20,000 at 6%

The calculator will compute:

Blended Rate = (200,000 × 4% + 20,000 × 6%) ÷ (200,000 + 20,000) = 4.18%

This blended rate helps you compare if a new loan offer—say at 4.1%—would save you money overall.

Frequently Asked Questions

Can I use this for student loans?

Yes. This tool is excellent for analyzing the impact of consolidating multiple student loans with different interest rates.

How accurate is the blended rate?

The calculation is based on straightforward math using loan balances and rates. It's highly reliable for estimating your overall interest burden.

Is this only for personal use?

No. It can also be helpful for business loan analysis and investment planning where financing comes from multiple sources.

What if I have loans with 0% interest?

Loans with 0% interest are factored into the total balance but don’t contribute to the weighted interest. This reduces the blended rate overall.

Is this the same as a compound interest calculator?

No. This tool calculates a weighted average rate, not compound growth. If you're looking to project savings or investment returns, try using a compound interest calculator or a future value tool.

Additional Use Cases

Pair this calculator with other tools like:

  • ROI Calculator: Evaluate return on investment for loans used in business.
  • Interest Rate Calculator: Break down and compare rates across products.
  • Investment Calculator: Plan future returns with a clear view of current debt costs.
  • Budget Estimator: Factor in debt costs to your overall monthly budget.

Conclusion

This Blended Rate Calculator is a practical and easy-to-use interest rate tool for anyone looking to simplify debt, evaluate loan options, or strengthen their financial plan. Whether you're consolidating loans or considering a refinance, this calculator provides the clarity you need to make smart, informed choices.