Loan Refinance Rate Comparison Calculator

This loan refinance rate comparison calculator estimates the monthly payment and total interest on a refinanced balance using the new APR and term you enter. Compare those estimates with your current loan figures separately; the calculator shows the new loan’s payment and interest, not whether refinancing saves money after fees or changes in payoff timing.

Formula

The calculator uses the standard fixed-payment amortization formula. It estimates a level monthly payment from the balance being refinanced, the annual percentage rate (APR), and the number of monthly payments.

• P = new loan principal, in dollars.
• APR = annual percentage rate, entered as a percentage per year.
• r = monthly rate as a decimal: APR ÷ 1,200.
• n = number of monthly payments: years × 12.
• Payment = P × r ÷ [1 − (1 + r)⁻ⁿ].
• Total interest = monthly payment × n − P.

The payment formula assumes payments are made monthly and the rate stays fixed. Although the result is displayed to cents, the formula’s unrounded payment is used to calculate total interest in this calculator. A lender’s actual schedule may differ because of payment dates, rounding, fees, or other contract terms.

Worked Example

Using the defaults—$20,000 principal, 8% APR, and a five-year term—the monthly rate is 8 ÷ 1,200 = 0.0066667, and the term is 5 × 12 = 60 payments.

Monthly payment = 20,000 × 0.0066667 ÷ [1 − (1 + 0.0066667)⁻⁶⁰] = $405.53 when rounded to cents.

Total interest = unrounded monthly payment × 60 − 20,000 = $4,331.84 when rounded to cents. The displayed payment is rounded separately; multiplying $405.53 by 60 can produce a slightly different total because of that rounding.

Assumptions

• The interest rate is fixed for the full term.
• Payments are equal, monthly, and made at the end of each period.
• Interest compounds monthly at APR ÷ 12.
• The calculation excludes refinance fees, taxes, insurance, PMI, and escrow.

How to Compare Refinance Rates

A rate comparison is meaningful only when the loan amount and repayment period are also considered. A lower APR can reduce interest for an otherwise identical loan, but extending the term can increase total interest even if the monthly payment falls. A shorter term can raise the payment while reducing the number of months interest accrues.

To make a like-for-like comparison, use the same estimated refinance balance and term for each rate scenario. Then compare the new loan’s payment and interest with the current loan’s remaining payment schedule—not its original loan amount or original total interest. For a fuller comparison, account for any costs added to the refinance balance and any costs paid separately.

• Get the proposed APR, loan amount, term, and payment schedule from the lender’s written disclosure.
• Check whether the quoted rate is fixed or adjustable and whether it includes any conditions or charges.
• Record all upfront charges and identify which are paid in cash versus included in the new principal.
• Compare remaining interest and payments on the current loan with the proposed loan over the same future period.

What the Results Do—and Do Not—Show

The monthly payment estimates the scheduled principal-and-interest amount for the new loan under the inputs. Total interest estimates the interest paid across the full modeled term. Neither output is a complete measure of refinance savings: the calculator does not know your current balance, remaining term, current APR, payoff amount, or transaction costs.

For example, suppose a refinance reduces the payment by lengthening repayment. The smaller monthly amount alone does not establish that the borrower pays less overall. To evaluate the arithmetic, compare total remaining costs over an equivalent period, including applicable costs and the balance still owed at the end of that period. Do not treat this calculator as a decision or approval tool.

Costs, Timing, and Common Comparison Errors

Refinance expenses may be due upfront or added to the amount borrowed. If costs are financed, enter the resulting principal rather than only the old loan balance. If paid separately, this calculator does not include them, so its total-interest output will not represent all costs associated with the transaction. Ask the lender for an itemized estimate and clarify which amounts are included in the quoted APR and payment.

Payoff timing matters, too. A payoff figure can differ from the balance shown on a recent statement because interest may accrue between the statement date and the date the old loan is paid. The new loan may also begin on a different schedule. Use figures tied to the same comparison date when possible, and verify payment dates and any remaining balance with the relevant loan documents.

• Comparing different terms: A lower payment on a longer term is not a direct rate comparison.
• Ignoring principal changes: Rolled-in costs or a different payoff amount change the calculation.
• Confusing APR and rate: APR and the stated interest rate may not be identical; use the figure and definition supplied for the estimate, and confirm the lender’s payment quote.
• Assuming a guaranteed quote: An entered rate is an assumption, not a prediction of an offer or approval.
• Overreading cents: Small differences can arise from payment rounding and the lender’s exact accrual method.

Alternatives to a Simple Rate Check

For a more complete arithmetic comparison, calculate the remaining payments on the existing loan and compare them with the proposed refinance payments plus costs. If the two loans have different terms, compare them over a common time horizon and include the balance each would still have at that point. A separate break-even calculation can divide applicable upfront costs by estimated monthly payment reduction, but that result is only a rough time measure: it does not account for the remaining balance, changing terms, or other costs.

If the rate can change, a fixed-rate payment formula cannot project future payments reliably. Review the lender’s disclosures for the adjustment schedule and scenarios, rather than treating the starting payment as constant. The formula here is intended for a fixed-rate, level-payment estimate.

Frequently Asked Questions

How do I compare loan refinance rates?
Compare the APRs using the same principal and term, then examine the payment, total interest, and applicable costs. Verify whether the quoted rate is fixed and confirm the figures in the lender’s disclosure.

Does a lower refinance rate always mean lower total cost?
No. The term, balance, fees, payment timing, and how long the loan remains outstanding all affect total cost. A lower monthly payment may result from taking longer to repay.

Should I include refinance fees in the loan amount?
If fees are added to the new balance, include them in the principal entered. If they are paid separately, the calculator omits them, so consider them separately in any overall comparison.

Why does my lender’s payment differ from this estimate?
The lender may use a different payoff amount, payment date, rounding convention, APR treatment, or contract terms. Taxes, insurance, escrow, and other charges can also affect the amount due even when they are not part of principal-and-interest.

Can I use this for an adjustable-rate refinance?
Only for a simplified payment estimate at the rate entered. The calculation assumes that rate remains fixed; it does not model later rate changes or their effect on payments.

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

Related

• Personal Loan Refinance Calculator and Company Guide
• DCU Auto Loan Refinance Calculator and Payment Guide
• Down Payment to Refinance a Personal Loan?

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