Loan Refinance Rates: Estimate Payments and Interest

Loan refinance rates are the interest rates offered on a replacement loan; the rate you receive depends on the lender, loan, and borrower details, so there is no single rate that applies to everyone. Use this calculator to estimate a refinanced loan’s monthly payment and total interest by entering its balance, APR, and term; compare the results with your current loan using actual lender figures.

Formula

The calculator estimates a fixed monthly payment using the standard amortizing-loan formula:

Payment = P × r ÷ [1 − (1 + r)⁻ⁿ]

• P is the refinanced loan amount, in dollars.
• r is the monthly interest rate, calculated as annual percentage rate (APR) ÷ 1,200.
• n is the number of monthly payments, calculated as loan term in years × 12.
• Payment is the estimated monthly principal-and-interest payment, in dollars.

Estimated total interest is monthly payment × number of payments − loan amount. The payment is rounded to cents before total interest is calculated. APR is entered as a percentage: for example, enter 8 for 8%, not 0.08. The formula assumes a rate above zero, which is why the APR input starts at 0.01%.

Worked Example

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

Substitute those values into the payment formula:

$20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] = $405.53 per month (rounded to the nearest cent).

Total interest is calculated using that rounded payment: $405.53 × 60 − $20,000 = $4,331.80. These figures illustrate the formula; they are not a quote or a currently available rate.

Assumptions

• The APR is fixed for the full term.
• Payments are made monthly, with the first payment one month after borrowing.
• Interest is modelled monthly at APR divided by 12.
• The estimate excludes fees, taxes, insurance, PMI, escrow, and any costs added to the loan balance.

What Refinance Rates Mean

Refinancing generally means taking out a new loan to repay an existing one. The new loan has its own principal, APR, and repayment schedule. A quoted rate is only one part of the borrowing cost: APR can also reflect certain finance charges, but the items included can vary by product and disclosure. Ask the lender for the rate, APR, payment schedule, and itemized charges for the specific offer.

A refinance rate is not necessarily the rate a borrower will receive just because it appears in an advertisement or estimate. A lender may calculate an offer using details such as the application, loan purpose, requested amount, repayment term, and credit and income information. The actual figures must come from the lender; this page does not state or predict current rates, qualification, or approval.

How to Compare a Refinance Estimate

For a useful comparison, put the current loan and proposed replacement on a consistent basis. Gather the current payoff amount—not just the original borrowed amount—and obtain the replacement loan’s written terms and charges. Then compare:

• Monthly payment: A longer repayment term can lower the scheduled payment while increasing the number of payments.
• Total interest: Compare interest across the full repayment period, not only the first month or year.
• Upfront and financed costs: Fees paid out of pocket and fees added to the new balance affect the overall cost differently.
• Remaining schedule: Compare the new term with the time left on the current loan. A lower payment alone does not show whether the total cost is lower.

For instance, a $20,000 balance at the example 8% APR costs about $405.53 monthly over five years under the calculator’s assumptions. A different APR or term changes the estimate. This example is arithmetic only; it does not claim either figure is available from a lender. To compare an existing loan, run the calculator with its remaining balance, then with the proposed balance, APR, and term. Add lender-provided costs separately if they are not included in the amount entered.

Costs, Limits, and Common Mistakes

This calculator covers scheduled principal and interest, not the full cost of a refinance. It does not add origination or other lender charges, early payoff charges, taxes, insurance, or optional products. Some costs may be paid upfront; others may be included in the amount borrowed. Use the lender’s itemized disclosure to identify which apply and enter the actual new balance if costs are financed.

• Do not confuse the payoff balance with the original loan amount or the sum of future payments.
• Enter APR as a percent (8, not 0.08) and term in years (5, not 60 months).
• Do not treat a lower payment as proof of lower total interest; the replacement term may be longer.
• Rounding can create small differences from a lender’s schedule, especially if its first payment date or payment amount differs.

The calculation assumes equal monthly payments and a fixed rate. It may not represent variable-rate loans, irregular payment timing, balloon payments, or products with changing charges. For those, request a payment schedule based on the contract terms. The calculator also cannot determine whether refinancing makes sense for a particular person; that requires comparing complete loan terms and costs.

Frequently Asked Questions

What is a loan refinance rate?
A refinance rate is the interest rate applied to a replacement loan used to repay an existing loan. The offered rate depends on the specific lender, product, and application; request the actual terms directly from the lender.

Is APR the same as the interest rate?
Not always. The interest rate measures interest charged on the balance, while APR may include certain finance charges as well as interest. Check the lender’s disclosure to see how its APR and charges are presented.

Does a lower refinance rate always mean a lower total cost?
No. The term, balance, payment schedule, and fees matter too. A longer term can reduce the monthly payment but extend repayment and affect total interest.

Should I include refinance fees in the loan amount?
If the lender adds fees to the new balance, include them in the amount entered. If they are paid separately, the calculator’s payment and interest totals will not include that out-of-pocket cost; account for it separately when comparing offers.

Why does my lender’s payment differ from this estimate?
The lender may use a different APR, balance, payment date, term, rounding method, or fee treatment. Compare the inputs and assumptions, then use the lender’s written payment schedule for its exact figures.

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

Related

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• What Increases Your Total FAFSA Loan Balance?
• Bank-Qualified Loan: Meaning and Payment Calculator

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