Loan Calculator for Refinance Payments and Interest

A refinance loan calculator estimates the monthly payment and total interest on a replacement loan from its amount, APR, and term. Enter the proposed new loan’s figures to see the scheduled payment and interest; compare those estimates with your current loan only after accounting separately for payoff amounts and fees.

Formula

The calculator uses the standard fixed-payment loan formula. It first converts the annual percentage rate (APR) to a monthly rate, then calculates a level monthly payment over the full term:

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

P is the new loan amount in dollars, APR is the annual rate entered as a percentage, r is the monthly rate as a decimal, n is the number of monthly payments, M is the monthly payment in dollars, and I is total interest in dollars. The displayed payment is rounded to cents, and total interest is calculated from that displayed payment across the scheduled number of months.

Worked Example

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

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

Assumptions

• The loan has a fixed APR and equal monthly payments throughout the term.
• Payments are made monthly; the formula treats the first payment as due after one month.
• Interest compounds monthly at APR ÷ 12.
• The calculation excludes origination and other fees, taxes, insurance, mortgage insurance, escrow, and any charges added to the balance.

Using the Calculator for a Refinance

Enter the amount you expect to borrow for the replacement loan, its offered APR, and the planned term. Use a lender’s written figures when available. The loan amount might not equal the balance shown on an old statement: a payoff quote can include interest accrued through a specified date, and some refinance costs may be paid upfront or included in the new balance. This calculator does not determine either figure, so enter a proposed principal that reflects the structure you are evaluating.

The result is a scheduled principal-and-interest estimate, not a complete housing or borrowing budget. A lower monthly payment can result from extending the repayment period, even if total interest over that longer schedule is higher. Conversely, a shorter term can increase the scheduled payment while reducing the number of payments. Compare both the monthly amount and the full repayment period rather than reading the payment alone as a measure of cost.

Comparing a New Loan With the Current One

For a meaningful comparison, gather the current loan’s remaining balance, APR, remaining months, and payment, along with a current payoff figure and any refinance charges. Calculate the proposed loan separately using its principal, APR, and term. Then account for costs that this calculator leaves out, including charges paid at closing or added to the balance.

A simple break-even estimate can help organize the comparison: divide refinance costs paid upfront by the monthly payment reduction to estimate how many months it would take for those reductions to equal those costs. This is only a rough cash-flow comparison. It does not account for differences in loan balances, future interest, a changed term, costs financed into the new loan, or the time value of money. If the payment does not decrease, that particular division does not provide a useful break-even period.

• Compare the same time horizon when examining future payments.
• Distinguish upfront costs from costs included in the principal.
• Check whether the new term resets the repayment schedule and changes the total number of payments.
• Use the lender’s disclosure for actual amounts, timing, and itemized charges.

What the Estimate Leaves Out

The formula assumes a fixed rate, regular monthly payments, and no changes to the scheduled principal. It does not model variable rates, skipped or late payments, extra principal payments, payment dates that differ from the assumed schedule, or a final payment adjusted for rounding. It also cannot determine eligibility, the actual APR, fees, or a lender’s payoff amount. Those figures must come from the relevant lender or loan documents; the example rate is only an input for demonstrating the arithmetic.

Rounding can cause small differences from a lender’s amortization schedule. The displayed monthly payment is rounded to the nearest cent, whereas a lender may calculate interest using its own payment-date and day-count conventions and may adjust the last payment. If the new loan includes fees, enter the resulting proposed principal if known, but remember that the calculator still will not show which portion of the balance represents fees.

Frequently Asked Questions

Does this calculator show how much I will save by refinancing?
No. It estimates the payment and interest for one proposed loan. To assess a refinance comparison, also obtain the current loan’s payoff information and the new loan’s actual costs, then compare schedules over an appropriate period.

Should I enter my current balance or the payoff amount?
Enter the proposed new loan principal. A payoff amount may differ from a statement balance because of accrued interest or other items. Ask the lender for the payoff and the amount that would be financed; this calculator cannot produce either figure.

Why might a refinance payment be lower but total interest higher?
A longer term spreads payments across more months. That can reduce each scheduled payment while increasing the amount of time interest accrues. Compare the term and total repayment, not only the monthly payment.

Are refinance fees included in the result?
No. Fees, taxes, insurance, and escrow are excluded. If a known charge is financed, it may affect the proposed principal you enter, but the result will not itemize or verify that charge.

Can I use this for an adjustable-rate loan?
The formula assumes the APR stays fixed for the entire term. It cannot forecast future adjustments, so it is not a complete estimate for a loan whose rate may change.

Why does my lender’s payment differ slightly?
Rounding, payment timing, day-count methods, financed charges, and the exact loan terms can affect the disclosed amount. Use the lender’s documents for the figures applicable to a specific loan.

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

Related

• Loan Balance Calculator: Estimate What You Still Owe
• Loan Balance After Payment: Calculate What Remains
• Loan Balance Amortization Calculator: See What You Owe

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