Loan Refinance Comparison Calculator

This loan refinance comparison calculator estimates the monthly payment and total interest on a replacement loan, then compares them with your current loan. Enter each loan’s balance, APR, and remaining term to see the payment difference and the estimated interest difference; use lender-provided figures for real offers.

Formula

The calculator applies the standard fixed-rate, fully amortizing payment formula separately to each loan. For a loan balance P, monthly rate r, and number of monthly payments n, the monthly payment is:

M = P × r ÷ [1 − (1 + r)⁻ⁿ]

For each loan, P is the current balance in dollars, r = APR ÷ 1,200 is the monthly rate as a decimal, and n = term in years × 12 is the payment count. The calculator rounds each payment to cents. Monthly payment difference is refinance payment minus current payment; a negative result means the modeled refinance payment is lower. Total interest is rounded monthly payment multiplied by the number of payments, minus the balance. The final output is refinance total interest minus current-loan total interest.

Worked Example

Using the calculator’s defaults, both balances are $20,000 and both terms are five years, or 60 monthly payments. The current APR is 8%, and the refinance APR is 6%. The monthly rates are 0.08 ÷ 12 = 0.0066667 and 0.06 ÷ 12 = 0.005.

• Current payment: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] = $405.53 per month, rounded to cents.
• Refinance payment: $20,000 × 0.005 ÷ [1 − (1.005)⁻⁶⁰] = $386.66 per month, rounded to cents.
• Payment difference: $386.66 − $405.53 = −$18.87 per month.
• Current modeled interest: ($405.53 × 60) − $20,000 = $4,331.80.
• Refinance modeled interest: ($386.66 × 60) − $20,000 = $3,199.60.
• Interest difference: $3,199.60 − $4,331.80 = −$1,132.20 over the stated terms.

This is a mathematical illustration, not a forecast of an actual offer. It assumes the same $20,000 amount is refinanced and excludes transaction costs and any changes to the payoff balance.

Assumptions

• Both loans have fixed APRs and equal monthly payments.
• Payments are made monthly, with the standard end-of-period payment timing used by the amortization formula.
• Interest compounds monthly at APR divided by 12.
• The calculation excludes lender fees, taxes, insurance, escrow, prepayment charges, and other costs because there are no inputs for them.
• The replacement balance is assumed to equal the current balance entered. Actual payoff amounts may differ, and a financed fee would increase the new loan amount.

How to Compare a Refinance

A refinance comparison is most useful when it separates the payment question from the overall cost question. A smaller monthly payment can result from a lower APR, a longer repayment term, or both. Extending the term may reduce each installment while increasing the number of months during which interest accrues. The calculator therefore shows both payment difference and interest difference for the terms entered.

For a meaningful estimate, use the current loan’s payoff balance rather than its original principal, and use its remaining term rather than the term it had when first opened. For the proposed loan, enter the amount that would actually be borrowed and the repayment term on the written offer. If fees are paid from the loan proceeds or added to the balance, include them in the new balance; this calculator otherwise assumes the balances are equal.

These outputs compare scheduled payments and interest, not every dollar involved in changing loans. If a current loan has a fee to pay it off, or a new loan has application, settlement, or other charges, those amounts can alter the result. A break-even estimate can be made separately by dividing eligible upfront costs by the monthly payment reduction, but that simple calculation does not account for the time value of money, different terms, or interest costs over the full life of either loan.

Costs and Comparison Limits

APR is an input, not a quote or prediction. Get the proposed rate, fees, loan amount, and payment schedule directly from the lender’s disclosure, and compare offers using the same assumptions. A quoted APR may incorporate some costs differently from a nominal interest rate, and loan documents can define charges and payment timing that this simplified formula does not model.

The “total interest difference” compares each loan across its full stated term. If the terms differ, this is not a same-date comparison: one loan may finish sooner, while the other remains outstanding. The result also does not calculate the current loan’s payoff balance on the refinance date, account for irregular payments, or model variable rates, skipped payments, or extra principal. For those situations, use the exact amortization and payoff information supplied for the loans.

Do not treat the payment difference alone as savings. For instance, stretching repayment can reduce the monthly bill even if total interest rises. Conversely, a lower modeled interest total does not prove a refinance has a lower overall cost when fees or other terms are omitted. The calculator is for comparing stated loan arithmetic; it does not assess eligibility or provide financial advice.

Frequently Asked Questions

What does a negative monthly payment difference mean?
It means the refinance payment calculated from the entered balance, APR, and term is lower than the current payment. It does not by itself indicate lower total cost.

Should I enter the original loan amount or the payoff balance?
For a comparison at the time of refinancing, enter the amount still owed or expected to be refinanced, not the original loan principal. Check the actual payoff figure with the current lender.

Why can a lower payment mean more interest?
A longer term spreads repayment across more months. Even with a lower monthly installment, interest may accumulate for longer, so compare the modeled totals and the terms as well as the payment.

Are refinance fees included?
No. There is no fee input. Add financed costs to the refinance balance for a rough payment estimate, and evaluate costs paid separately using the lender’s disclosed figures.

Does this comparison include tax or insurance?
No. It models principal and interest only. Taxes, insurance, escrow, and other loan-related charges are outside the calculation.

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

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in oldp | Current balance | $ | 20000 | 1 | 100000000
in oldapr | Current APR | % | 8 | 0.01 | 100
in oldyrs | Current remaining term | years | 5 | 0.0833 | 50
in newapr | Refinance APR | % | 6 | 0.01 | 100
in newyrs | Refinance term | years | 5 | 0.0833 | 50
out diff | Monthly payment difference (new minus current) | $ | round(newpmt, 2) - round(oldpmt, 2) | 2
out oldpmt | Current loan monthly payment | $ | oldp * (oldapr / 1200) / (1 - (1 + oldapr / 1200) ^ -(oldyrs * 12)) | 2
out newpmt | Refinance loan monthly payment | $ | oldp * (newapr / 1200) / (1 - (1 + newapr / 1200) ^ -(newyrs * 12)) | 2
out intdiff | Total interest difference over each stated term (new minus current) | $ | round(newpmt, 2) * newyrs * 12 - oldpmt * oldyrs * 12 | 2