Personal Loan Refinance Calculator and Cost Guide

This personal loan refinance calculator estimates the monthly payment and total interest on a replacement loan from its amount, APR, and term. Enter the proposed loan terms to see the scheduled payment and interest; compare those estimates with your current loan and any quoted fees separately.

Formula

The calculator uses the standard fixed-payment loan formula. It converts the annual percentage rate (APR) into a monthly rate, calculates a level monthly payment over the term, then subtracts the original principal from all scheduled payments to estimate interest.

• Monthly payment: M = P × r ÷ [1 − (1 + r)⁻ⁿ]
• Total interest: I = M × n − P
• Monthly rate: r = APR ÷ 1,200, where APR is entered as a percentage.
• Number of payments: n = years × 12.

P is the replacement loan principal in dollars, M is the monthly payment in dollars, I is total interest in dollars, r is the monthly interest rate as a decimal, and n is the payment count in months. The displayed payment is rounded to cents. The interest estimate uses that rounded payment multiplied by the full scheduled payment count, then subtracts principal; an actual final payment can differ slightly because of rounding and lender-specific payment calculations.

Worked Example

Using the defaults—$20,000 principal, 8% APR, and a five-year term:

1. Convert the APR to a monthly rate: 8 ÷ 1,200 = 0.0066667.
2. Convert the term to payments: 5 × 12 = 60 months.
3. Substitute into the payment formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] ≈ $405.53 per month.
4. Estimate total interest using the rounded payment: $405.53 × 60 − $20,000 = $4,331.80.

These figures describe the entered replacement-loan terms only. They do not show whether refinancing reduces your overall cost, because the calculator does not include the current loan’s remaining balance, payoff amount, fees, or payment history.

Assumptions

• The interest rate is fixed for the full term.
• Payments are made monthly at the end of each period.
• Interest compounds monthly using APR divided by 12.
• Fees, taxes, insurance, PMI, and escrow are not included; most are not relevant to an unsecured personal loan, but any applicable charges still need to be checked.
• The schedule assumes every payment is made on time and in the stated amount.

How to Compare a Refinance With Your Current Loan

Refinancing means taking a new loan to pay off an existing one, leaving you with the new loan’s repayment schedule and terms. A lower monthly payment alone does not establish a lower total cost: extending repayment can reduce the monthly bill while increasing the time interest accrues. Conversely, a shorter term may raise the payment while reducing the number of payments.

For a useful comparison, gather the current loan’s payoff quote for a specific date, current payment, remaining term, and any prepayment or account-closing charges disclosed by the lender. Then obtain the proposed loan’s amount, APR, term, payment schedule, and all fees. A payoff quote can differ from the balance on a recent statement because interest may accrue between statement date and payoff date.

• Compare the remaining payments on the existing loan with the proposed payments, including fees that would be paid upfront or financed.
• Check whether the new principal is only the payoff amount or includes extra cash or rolled-in costs.
• Consider the repayment end date as well as the monthly amount.
• Use exact written figures rather than treating an advertised or preliminary offer as a final disclosure.

For example, suppose a replacement loan lowers the payment by extending the term. The payment may look smaller, yet there are more months in which interest can accrue. To compare fairly, calculate the total remaining cost under each option and account for charges; this calculator alone cannot determine the difference because it has no inputs for the old loan or fees.

Costs, Terms, and Common Pitfalls

APR is an annualized rate used to express borrowing cost, but the calculator’s formula treats it as a fixed nominal rate divided into monthly periods. Fees may be included in a lender’s APR calculation or charged separately, depending on the loan terms and applicable disclosure. Use the lender’s stated figures and read the cost breakdown instead of assuming every charge is represented by the rate entered here.

• Using the original balance: The new loan amount should reflect the amount actually being borrowed, often based on a payoff quote, not necessarily the original loan principal.
• Ignoring financed fees: If charges are added to the new balance, they can increase both payment and interest. Enter the full amount borrowed to model that effect, while separately recording any costs paid upfront.
• Focusing only on the payment: A longer term can lower a payment without lowering total interest or total outlay.
• Mixing APR and monthly rates: Enter APR as a percentage such as 8, not 0.08 and not the monthly rate.
• Rounding differences: The calculator rounds the monthly payment to cents. A lender’s exact schedule may use daily accrual, different rounding conventions, or a final adjusted payment.

A refinance may also change features beyond price, such as due dates or payment arrangements. Confirm how the existing debt will be paid off, when the replacement loan’s first payment is due, and whether any automatic payments to the old account need to be stopped after payoff is confirmed. Avoid sending sensitive account credentials through an unverified message or link; use contact details and secure channels you independently confirm.

When This Calculator Helps—and Its Limits

Use the estimate to understand the payment and interest implied by a proposed principal, APR, and term, or to see how changing one of those inputs affects the arithmetic. It can help frame questions to ask, but it does not assess eligibility, predict a credit decision, or determine whether a particular loan fits your circumstances.

The formula is for a fixed-rate loan with equal monthly payments and a positive APR. It does not model variable rates, irregular payment dates, extra payments, late charges, payment deferrals, or a changing balance. The minimum term and rate permitted by the calculator are technical input limits, not lender requirements. Obtain actual current and proposed figures from the relevant lenders; do not treat the defaults as a rate quote.

Frequently Asked Questions

Should I apply to refinance my personal loan?
There is no universal answer. Compare the written replacement-loan terms with the current payoff amount, remaining payment schedule, and all costs. The calculator estimates only the new loan’s payment and interest; it cannot judge your eligibility or make the decision for you.

Does refinancing a personal loan lower the monthly payment?
It can, depending on the replacement amount, APR, and term. A longer term can lower the scheduled payment while increasing the number of payments, so also compare total cost and the payoff date.

Will refinancing always save interest?
No. The result depends on the proposed terms, fees, remaining cost of the existing loan, and how long each loan is carried. A lower APR by itself does not establish savings if the new term is longer or charges apply.

What loan amount should I enter?
Use the amount you expect to borrow for the replacement loan. A payoff quote for the existing loan can provide a more current figure than its original principal or an older statement balance. Add financed costs only if they will actually be included in the new balance.

Does the calculator include refinancing fees?
No. It calculates scheduled payments and interest from principal, APR, and term only. Check the lender’s fee and cost disclosures, and include fees in your own comparison whether they are paid upfront or added to the loan.

Why might my lender’s payment differ from this estimate?
The lender may use different rounding, payment dates, accrual methods, fees, or a final adjusted payment. The estimate assumes a fixed APR, monthly compounding, and equal end-of-month payments. The result is an estimate; the lender’s disclosure gives the exact figures.

Related

• Reducing Balance Loan Calculator and Formula
• Outstanding Loan Balance Calculator: Estimate What Remains
• Personal Loan Balance Transfer Calculator and Guide

in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2