Personal Loan Refinance Calculator: Compare Payments

A personal loan refinance calculator estimates the payment and total interest on a replacement loan using its amount, APR, and term. Enter the balance you plan to refinance and the replacement loan’s terms to see the estimated monthly payment and interest; compare those figures with your current loan using its actual payoff amount and remaining schedule.

Formula

The calculator uses the standard fixed-payment amortization formula. It assumes the APR is a nominal annual rate divided into monthly periods, and that the same payment is made at the end of each month.

• Monthly payment: M = P × r / [1 − (1 + r)⁻ⁿ]
• Total interest: I = (M × n) − P
• Monthly rate: r = APR / 1,200, converting an annual percentage to a monthly decimal.

P is the replacement loan amount in dollars, APR is the annual percentage rate entered as a percentage, n is the term in months (years × 12), M is the monthly payment in dollars, and I is total interest in dollars. The displayed payment is rounded to cents. The interest output uses that rounded payment multiplied by the number of scheduled monthly payments, then subtracts the principal. Because actual payment schedules can adjust the final installment for rounding, a lender’s exact total may differ slightly.

Worked Example

Using the calculator’s default inputs—$20,000, an 8% APR, and a five-year term:

1. Convert the APR to a monthly rate: 8 ÷ 1,200 = 0.0066667.
2. Convert the term to months: 5 × 12 = 60.
3. Substitute into the payment formula: M = 20,000 × 0.0066667 ÷ [1 − (1 + 0.0066667)⁻⁶⁰].
4. The monthly payment is approximately $405.53 after rounding to cents.
5. Total interest is $405.53 × 60 − $20,000 = $4,331.80.

These are estimates under the stated formula, not a lender quote.

Assumptions

• The interest rate stays fixed for the full term.
• Payments are level, made monthly at the end of each period, with no skipped or extra payments.
• Interest is compounded monthly using APR divided by 12.
• The calculator excludes origination or other fees, taxes, insurance, and any costs not represented by the loan amount or APR.

How to Use the Calculator for a Refinance

Use the amount required to pay off the existing loan, not simply the original amount borrowed. A payoff quote can differ from the balance shown on a recent statement because of accrued interest, timing, or other account-specific items. If a fee is added to the new loan, include it in the amount only if the lender confirms it will be financed; otherwise, the estimate will not reflect that cost.

• Find the current payoff amount and remaining term from the loan servicer.
• Enter the proposed replacement amount, quoted APR, and proposed term. Treat these as inputs to test, not as figures the calculator can determine.
• Record the estimated payment and total interest, then compare them with the current loan’s remaining payments and interest calculated on the same basis.
• Account separately for fees paid upfront or added to the balance, and for any difference in payment dates or payoff timing.

For a fair comparison, look at the remaining cost from today rather than comparing the new loan’s full-term total with the original loan’s historical cost. Past payments have already been made. The relevant comparison is what remains on the existing loan versus the payments and any costs associated with the replacement loan.

How to Read the Results and Compare Costs

A lower monthly payment does not by itself mean the replacement loan has lower total cost. Extending repayment over more months can reduce each scheduled payment while increasing the time interest accrues. Conversely, a shorter term can raise the monthly payment even when the total interest estimate is lower. The calculator shows the replacement loan’s modeled payment and interest; it does not decide which matters more for a particular borrower.

For example, a comparison should use the current loan’s actual remaining payment schedule, not its original term, and should include refinance-related costs where applicable. If costs are paid in cash, list them separately. If they are financed, the new principal should reflect them. Do not add the same cost in both places. A break-even calculation may be useful when costs are paid upfront, but it requires a reliable estimate of monthly savings and a clear treatment of fees; this calculator does not calculate that point.

APR and interest rate are not always interchangeable in every loan offer: APR may reflect certain borrowing costs in addition to the interest rate. Use the lender’s quoted APR for a like-for-like estimate, and review the offer’s disclosures to understand which charges are included and how the payment schedule is defined.

Limits and Common Calculation Problems

This formula describes a conventional fixed-rate loan with equal monthly payments. It does not model variable rates, irregular payment dates, deferred payments, late charges, prepayment terms, or a final payment adjusted by a lender. It also cannot determine eligibility, the rate or amount a lender may offer, or whether an existing loan has a charge for paying it off early.

• Wrong amount: Entering the original principal instead of the current payoff amount can distort the comparison.
• Wrong term units: The term field is in years. Convert a remaining term expressed in months to years before entering it, or use the calculator’s displayed year value carefully; the formula converts years to months.
• APR entered incorrectly: Enter 8 for 8%, not 0.08. The formula performs the percentage conversion.
• Unincluded costs: A payment estimate based only on principal and APR will omit costs that are not included in those inputs.
• Rounding differences: The calculator rounds the payment to cents before calculating total interest. A lender may use a different rounding convention or adjust the last payment.

Frequently Asked Questions

What loan amount should I enter?
Enter the amount needed to replace the current debt, based on a current payoff figure. Include additional costs only if they will be financed into the replacement loan.

Does refinancing always lower the monthly payment?
No. The payment depends on the new amount, APR, and term. A shorter term or a higher rate can result in a higher payment, while a longer term can lower the payment but extend repayment.

Does a lower payment mean I will pay less interest?
Not necessarily. A longer repayment term can produce a lower monthly payment and more total interest. Compare the remaining cost of the current loan with the full modeled cost and relevant costs of the replacement.

Does this calculator include refinance fees?
No separate fee input is provided. If a fee is financed, include it in the loan amount only when that matches the proposed loan; if paid upfront, track it separately in your comparison.

Why does my lender’s payment differ?
The lender may use a different payoff amount, payment date, fee treatment, rounding method, or final-payment adjustment. Check the lender’s written figures and assumptions.

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

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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