Loan Refinance Interest Rates and Payment Calculator

This refinance calculator estimates the monthly payment and total interest on a replacement loan from its amount, APR, and term. Enter the figures offered for the new loan to see the payment and interest under a fixed-rate, monthly-payment model.

Formula

The calculator uses the standard fixed-payment loan formula. It converts the annual percentage rate to a monthly rate, then calculates the payment that repays the principal and interest over the selected number of months.

• p is the amount borrowed in the new loan, in dollars.
• apr is the annual percentage rate entered as a percentage per year.
• r = apr / 1200 is the monthly interest rate as a decimal.
• n = yrs × 12 is the number of monthly payments.
• pmt is the monthly payment in dollars, rounded to the nearest cent.
• int is estimated total interest in dollars, using that rounded payment.

In symbols, the monthly payment is pmt = round[p × r / (1 − (1 + r)⁻ⁿ), 2]. Total interest is int = pmt × n − p. This assumes the stated APR is applied at a monthly rate of APR divided by 12 and that payments are level and made monthly.

Worked Example

Using the calculator’s default inputs: loan amount p = $20,000, APR 8%, and term 5 years.

1. Convert the term to months: n = 5 × 12 = 60.
2. Convert the APR to a monthly decimal rate: r = 8 / 1200 = 0.0066667.
3. Substitute into the payment formula: pmt = round[20,000 × 0.0066667 / (1 − (1.0066667)⁻⁶⁰), 2] = $405.53.
4. Calculate total interest using the rounded payment: int = $405.53 × 60 − $20,000 = $4,331.80.

The figures are estimates for the new loan alone. They do not establish whether refinancing reduces the total cost of a borrower’s existing debt.

Assumptions

• The APR stays fixed for the full term.
• Payments are equal monthly payments, made at the end of each monthly period.
• Interest is modeled monthly at APR divided by 12.
• Fees, taxes, insurance, mortgage insurance, escrow, and any costs added to the balance are not included unless reflected in the entered loan amount or APR.

What Refinance Interest Rates Mean

A refinance replaces an existing loan with a new loan. The new loan’s interest rate is the rate used to calculate interest on its outstanding balance; APR is a broader annualized measure that can include certain finance charges, depending on the loan and disclosure. The quoted rate and APR may therefore differ. For an estimate, use the APR that corresponds to the offer and confirm with the lender what charges its figure includes.

There is no single refinance rate that applies to every borrower or loan. The applicable rate is a lender-provided input and can depend on the loan type, borrower and collateral details, term, and other factors. Rates also change over time. This calculator deliberately does not supply or predict a current rate: enter a written quote or other figure supplied for the specific loan being evaluated.

How to Compare a Refinance Estimate

A lower monthly payment does not by itself show that a refinance costs less overall. The payment may fall because the new term is longer, even if the total interest over the new loan’s life rises. For a fair comparison, gather the current payoff amount, remaining term and payment, and the new loan’s amount, APR, term, and itemized charges. Compare the remaining cost of the existing loan with the projected cost of the replacement over a consistent period.

For example, someone with a $20,000 balance could enter a $20,000 replacement loan, an 8% APR, and a five-year term. This gives the calculator’s example payment of $405.53. If fees are financed, the new loan amount might instead be higher than the old payoff; enter that higher amount to see how it affects the modeled payment and interest. The example is arithmetic, not a rate benchmark or a prediction of an offer.

Also distinguish total interest from total borrowing cost. The calculator’s interest output is simply rounded monthly payment multiplied by the number of payments, minus principal. It does not add separate fees or account for costs that occur outside the loan balance. A lender’s written disclosure is needed for exact figures and charge details.

Common Limits and Mistakes

• Comparing different terms: A shorter term usually means fewer scheduled payments, while a longer term spreads repayment over more months. Compare terms explicitly rather than reading the monthly payment alone.
• Leaving out financed costs: If charges are rolled into the new balance, include them in the loan amount when they are known. Do not count them twice.
• Confusing rate and APR: A nominal interest rate and an APR are not always interchangeable. Use the figure requested by the calculator and check the lender’s definition.
• Ignoring variable-rate terms: This calculation assumes a fixed rate. It does not project future payment changes on a variable-rate loan.
• Rounding differences: The payment is rounded to cents before total interest is calculated. A lender’s schedule may differ slightly because of exact dates, daily accrual, payment timing, or its rounding method.

Frequently Asked Questions

What is a refinance interest rate?
A refinance interest rate is the rate charged on the replacement loan’s unpaid balance. The APR may also reflect certain finance charges, so check the lender’s disclosure to understand which figure is quoted.

How do I calculate a refinance payment?
Use the new loan amount, APR, and term in months in the fixed-payment formula. This page converts years to months and APR to a monthly rate, then rounds the result to cents.

Does a lower monthly payment mean I will pay less overall?
Not necessarily. A longer term can lower the monthly payment while increasing the number of payments and potentially the total interest. Compare total costs and terms, not only monthly payments.

Should I enter the interest rate or APR?
Use the APR for the loan offer when available, as this calculator labels its input APR. Confirm which charges are included and whether the quoted rate differs from the APR.

Does the calculator include refinance fees?
No. It calculates scheduled interest from the entered loan amount, APR, and term. Add known costs to the loan amount only if they will be financed; other costs are not modeled.

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

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in p | New 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 | $ | round(p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)), 2) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2