Average Cost to Refinance a Personal Loan

This calculator estimates the monthly payment and total interest on a refinanced personal loan from the new balance, APR, and term you enter. There is no single average refinancing cost: lender fees and other charges vary, so enter any fee you expect to finance as part of the loan amount to see how it affects the payment.

Formula

The payment calculation uses the standard fixed-payment loan formula:

Monthly payment = P × r ÷ [1 − (1 + r)−n]

• P is the amount borrowed for the new loan, in dollars. It may include fees only if those fees are added to the amount financed.
• r is the monthly interest rate, calculated as annual APR ÷ 1,200.
• n is the number of monthly payments, calculated as years × 12.

The calculator’s total-interest output is monthly payment × n − P. It uses the displayed payment rounded to cents. This is a simplified estimate: actual payment schedules may differ because of lender-specific rounding, payment dates, or charges not included in the loan balance.

Worked Example

Using the calculator’s defaults—$20,000 borrowed, 8% APR, and a five-year term:

1. Convert APR to a monthly rate: 8 ÷ 1,200 = 0.0066667.
2. Convert the term to payments: 5 × 12 = 60 months.
3. Apply the payment formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰].
4. The monthly payment is approximately $405.53.
5. Total interest, using the rounded payment, is $405.53 × 60 − $20,000 = $4,331.80.

What Does It Cost to Refinance a Personal Loan?

The refinance cost is the sum of charges connected with replacing the existing loan. Some lenders may charge an origination or processing fee, while other costs can include an application charge, a payoff or account-closing charge, or interest that accrues before the old balance is fully paid. Availability and amount depend on the loan agreement and lender; there is no reliable universal average that applies to every borrower.

A fee can be paid upfront or added to the new loan, if the lender allows it. Paying it upfront means it is an immediate out-of-pocket expense. Financing it increases the new principal, so interest may also accrue on that amount. For example, if a $400 fee is added to a $20,000 refinance, the calculator would use $20,400 as the loan amount. At the example’s APR and term, that added principal increases the payment by about $8.11 a month and total scheduled payments by about $486.60, of which $86.60 is interest on the added amount.

Check the written loan offer for all charges and how each is collected. Do not assume that a low or zero upfront fee means refinancing has no cost: the APR, repayment term, and financed charges affect the amount paid over time.

How to Compare the Full Cost

A lower monthly payment alone does not establish that a refinance costs less. A longer term can reduce the required payment while increasing the number of months interest accrues. Compare the old loan’s remaining scheduled payments with the new loan’s scheduled payments and any refinance charges, using figures supplied by the respective lenders.

• Get the current payoff amount and ask whether it includes accrued interest or any payoff charge.
• Request the new loan’s APR, amount financed, term, monthly payment, and itemized fees in writing.
• Separate upfront costs from fees added to the new principal.
• Compare total remaining payments, not just monthly payments. Consider whether the new term changes the payoff date.
• Check whether the old loan has a charge for early repayment and how that would affect the comparison.

For instance, a lower new payment may result from stretching repayment over more months. That can mean more total interest even if the new APR is lower. A useful comparison must therefore include both the payoff timeline and total dollars due, not just a payment quote.

What This Calculator Includes—and What It Leaves Out

The calculator models a single loan with a fixed APR, equal monthly payments, and monthly compounding at APR divided by 12. Its first result is the estimated payment; the second is estimated total interest over the entered term. To estimate a fee-inclusive refinance, enter the proposed amount financed, including any fees rolled into the balance. To estimate the loan without those fees, enter only the amount borrowed.

It does not determine a lender’s fees, calculate the payoff balance on your existing loan, or show whether an application will be approved. It also does not include fees paid separately, late charges, optional products, taxes, or changes in payment timing. The APR and fee figures are inputs, not predictions; get the actual terms from the lender’s disclosure. The calculator does not decide whether refinancing fits a person’s circumstances.

Common Questions and Misunderstandings

One common mistake is treating the amount originally borrowed as the refinance amount. The new loan generally needs to cover the current payoff balance, which can differ from the original principal after payments and interest. Obtain a current payoff quote rather than relying on the starting balance.

Another is comparing an advertised payment with the existing payment without checking the term. If the new loan runs longer, a smaller monthly bill may come with a larger total paid. Also distinguish APR from the interest rate: APR is a useful cost figure to compare, but the agreement’s itemized charges and amount financed still matter.

Frequently Asked Questions

What is the average cost to refinance a personal loan?
There is no single dependable average. Costs depend on the lender’s fees, the payoff amount, whether charges are financed, and the loan terms. Ask for an itemized quote to identify the actual cost.

Can I refinance a personal loan with no fees?
Some offers may show no separate upfront fee, but check the complete disclosure for the APR, amount financed, and any charges included elsewhere. “No fee” should not be taken to mean that the loan has no cost.

Does refinancing a personal loan save money?
It depends on the new APR, fees, remaining balance, and repayment term. Compare the total remaining cost of the current loan with the new loan’s total payments plus charges; a lower monthly payment by itself does not prove savings.

Are refinance fees added to the loan?
That depends on the lender and offer. If a charge is added to the balance, it increases the amount borrowed and may accrue interest. If paid upfront, it is a separate immediate expense.

Does this calculator include my old loan’s payoff fee?
No. It estimates payments and interest for the new loan only. Check your existing agreement or ask the lender for the current payoff amount and any applicable charge, then include relevant costs in your comparison.

This result is an estimate; the lender’s disclosure gives the exact figures.

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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