Personal Loan Refinance Calculator and How It Works

A personal loan refinance calculator estimates the monthly payment and total interest on a replacement loan from its amount, APR, and term. Enter the proposed loan details to see the estimated payment and interest; compare those figures with your current loan’s remaining cost, using lender-provided terms and fees.

Formula

The calculator uses the standard fixed-payment installment-loan formula. It assumes the loan is repaid through equal monthly payments and calculates total interest from those rounded payments.

• p = amount borrowed in dollars.
• apr = annual percentage rate, entered as a percentage per year.
• r = monthly rate, calculated as APR ÷ 1,200.
• n = number of monthly payments, calculated as years × 12.
• pmt = monthly payment in dollars, rounded to the nearest cent.
• int = estimated total interest in dollars over the full term.

In symbols, the monthly payment is pmt = round[p × r ÷ (1 − (1 + r)−n), 2]. Estimated total interest is int = pmt × n − p. The second equation uses the cent-rounded payment, so it follows the calculator’s displayed payment rather than an unrounded theoretical value.

Worked Example

Using the calculator’s default values—$20,000 borrowed, 8% APR, and five years:

1. Convert the APR to a monthly rate: r = 8 ÷ 1,200 = 0.0066667, or about 0.66667% per month.
2. Convert the term to monthly payments: n = 5 × 12 = 60.
3. Apply the payment formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)−60] ≈ $405.53 per month after rounding.
4. Calculate interest using the displayed payment: $405.53 × 60 − $20,000 = $4,331.80.

The estimate is a monthly payment of $405.53 and total interest of $4,331.80, excluding any fees or other charges.

Assumptions

• The interest rate stays fixed for the entire loan term.
• Payments are equal, made monthly, and begin according to the ordinary installment-loan schedule.
• Interest is modelled monthly at APR divided by 12.
• The calculation excludes origination or other lender fees, taxes, insurance, late charges, and payment timing adjustments.

What Personal Loan Refinancing Means

Personal loan refinancing means taking out a new loan to pay off an existing personal loan. The replacement loan may have a different rate, term, payment, or amount. A lender may send payoff funds directly to the old creditor or disburse the new loan to the borrower; the process depends on the lender and loan arrangement.

Refinancing changes the debt’s terms; it does not erase the amount owed. A lower monthly payment can result simply from extending repayment over more months, even if the new loan accumulates more interest overall. Conversely, a shorter term may reduce the time interest accrues but raise the required monthly payment. The calculator shows the new loan’s estimated arithmetic, not whether refinancing produces a net saving.

How to Compare a Refinance With Your Current Loan

For a meaningful comparison, use the current payoff amount—not the original principal—and obtain a dated payoff quote from the existing lender. The amount needed to close a loan can differ from the balance shown on a recent statement because interest may continue accruing and the lender may include other amounts.

• Record the current payoff amount and the number and amount of payments remaining.
• Get the proposed loan’s APR, term, payment schedule, and itemized fees in writing.
• Compare total remaining payments on the current loan with the new loan’s total payments plus charges that are not included in its balance.
• Check whether the new loan amount includes fees or extra cash. Borrowing more than the payoff increases the amount on which interest may be charged.
• Confirm how and when the old loan will be paid off, then verify that the account closes with no remaining balance.

For example, a new offer might lower a payment by stretching repayment from three years to six. That smaller monthly amount alone does not establish that the borrower pays less overall. Also check whether the current agreement has a prepayment charge and whether the proposed loan has an origination fee; use the actual disclosures rather than assuming either is absent.

Costs, Limits, and Common Misunderstandings

This calculator assumes the full amount entered is financed and that the stated APR applies throughout. It does not include fees unless they are incorporated into the amount borrowed or reflected in the APR supplied by the lender. For a fee-inclusive comparison, ask for the lender’s itemized figures and use the actual amount financed and APR under the lender’s disclosure.

The total-interest figure is an estimate based on making every scheduled payment on time and keeping the loan for the full term. Paying early, paying late, changing payment dates, or having a variable rate can change actual results. A payment rounded to cents can also cause a small difference from a lender’s final payment schedule, especially if the last payment is adjusted.

A refinance inquiry or application is not a guarantee of approval or of the displayed terms. Lenders set their own eligibility and pricing decisions, and the calculator cannot predict them. Do not treat the sample 8% APR as a market rate or an offer; enter the APR and fees shown in the particular lender’s documents.

Frequently Asked Questions

What companies refinance personal loans?
Personal-loan refinancing may be offered by banks, credit unions, and online lenders, but availability, eligibility, and terms vary. Check whether a provider allows the proceeds to pay an existing personal loan and review its written disclosures.

Can I refinance a personal loan with another personal loan?
In many cases, a borrower can use a new personal loan to pay off an existing one, subject to the new lender’s terms and approval. Confirm the payoff process and whether the new loan permits the intended use of funds.

Does refinancing always lower the monthly payment?
No. The payment depends on the amount borrowed, APR, and term. A longer term can lower the payment while increasing total interest, and a shorter term can raise the payment.

Will refinancing save me money?
Not necessarily. Compare the current loan’s remaining payments and payoff costs with all payments and charges on the replacement loan. A lower APR or payment by itself does not prove that total cost will be lower.

Does this calculator include refinancing fees?
No. It calculates payments and interest from the loan amount, APR, and term only. Use lender disclosures to identify fees and determine whether they are paid separately or added to the amount financed.

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

Related

• Loan Refinance Calculator: Estimate Monthly Savings
• Loan Refinance Comparison Calculator
• Loan Refinance Break-Even Calculator and Formula

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