Personal Loan Refinance Calculator: Payment and Interest

A personal loan refinance calculator estimates the monthly payment and total interest on a replacement loan using its amount, APR, and term. Enter the new loan’s figures to see the estimated payment and interest; compare those results with your existing loan’s remaining costs separately, including any fees.

Formula

This calculator uses the standard fixed-payment amortization formula. It estimates a new loan’s payment and interest from the principal, annual percentage rate, and term. It does not itself determine whether refinancing lowers your overall cost: that comparison also requires the current loan’s balance, remaining payments, and any charges associated with replacing it.

• Monthly payment: M = P × r ÷ [1 − (1 + r)⁻ⁿ], rounded to the nearest cent.
• Total interest: I = M × n − P.
• Monthly rate: r = APR ÷ 1,200, where APR is entered as a percentage per year.
• Number of payments: n = years × 12.

P is the replacement loan amount in dollars, M is the monthly payment in dollars, I is the estimated interest over the full term in dollars, r is the monthly interest rate as a decimal, and n is the number of monthly payments. The calculator’s interest output uses the rounded monthly payment multiplied by the number of payments, then subtracts the amount borrowed.

Worked Example

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

1. Convert APR to a monthly decimal rate: r = 8 ÷ 1,200 = 0.0066667.
2. Convert the term to payments: n = 5 × 12 = 60.
3. Substitute into the payment formula: M = 20,000 × 0.0066667 ÷ [1 − (1 + 0.0066667)⁻⁶⁰]. The unrounded result is about $405.53, so the monthly payment is $405.53.
4. Calculate interest using the rounded payment: I = $405.53 × 60 − $20,000 = $4,331.80.

Assumptions

• The interest rate stays fixed for the entire term.
• Payments are equal monthly payments made at the end of each monthly period.
• Interest compounds monthly at APR divided by 12.
• The calculation does not include fees, taxes, insurance, or other charges. It also does not account for a lender’s payoff amount, payment timing differences, or a fee added to the replacement balance.

How to Use the Estimate for Refinancing

To model a proposed replacement loan, enter the amount that would actually be borrowed, the APR quoted for that loan, and its term. Confirm whether the proposed amount includes any fees or other costs; if costs are added to the balance, include them in the amount input only when that is how the lender structures the loan. Use the lender’s figures rather than assuming that an advertised or illustrative rate applies to you.

The output describes the replacement loan alone, not the change in your total borrowing cost. A lower monthly payment can result from a longer term even when the total interest is higher. Conversely, a shorter term can raise the monthly payment while reducing the time over which interest accrues. To make a like-for-like comparison, gather the current loan’s payoff amount, remaining payment schedule, and any charges for ending or starting a loan. Compare the total remaining outlay under each scenario, taking account of when payments occur.

For instance, a new loan might have a smaller payment because it spreads repayment over more months. That number by itself does not establish that refinancing saves money: the longer repayment period can mean more payments, and fees can change the result. This calculator does not calculate the old loan’s remaining interest or subtract costs from any savings.

Understanding the Results and Their Limits

Monthly payment is the estimated scheduled amount for principal and interest under the formula’s assumptions. It is not necessarily the complete amount due if the loan contract includes other charges. Total interest is the estimated interest across all scheduled payments, based on the entered APR and term and the payment rounded to cents. It is not the total amount repaid; the estimated total principal and interest is the loan amount plus the interest output.

This is a mathematical estimate, not a lender quote or an approval prediction. The calculator cannot know the final loan amount, offered APR, fees, payoff figure, or contract terms unless you provide them, and it does not model a changing rate, irregular payments, missed payments, or extra payments. The minimum APR is set above zero because the displayed payment formula divides by the monthly rate. The allowed term range is 0.0833 to 50 years; actual loan terms depend on the offer you receive.

Common Mistakes and Comparisons

• Entering the wrong amount: A refinance calculation should use the amount borrowed for the replacement loan, not automatically the original amount of the old loan. Check the current payoff figure and how any costs are handled.
• Mixing APR and monthly rates: Enter the annual percentage as a percentage, such as 8 for 8%, not 0.08 or a monthly rate. The formula converts it to a monthly rate.
• Comparing payment amounts alone: A smaller payment does not necessarily mean lower total interest or lower total cost. Compare payment count and costs as well.
• Rounding too early: The monthly payment is rounded to cents before total interest is calculated. Hand calculations that keep extra digits throughout may differ slightly.

A common misconception is that refinancing automatically reduces the interest owed because the new loan has a different rate. The outcome also depends on the amount refinanced, the new term, payment schedule, and charges. Use the calculator as one part of a comparison, not as a complete break-even or savings calculation.

Frequently Asked Questions

How do I calculate a personal loan refinance payment?
Enter the replacement loan amount, its APR as a percentage per year, and the term in years. The calculator converts the APR to a monthly rate and applies the fixed-payment formula to estimate the monthly principal-and-interest payment.

Does refinancing a personal loan always save interest?
No. A payment may fall because the term is longer, while total interest or costs may rise. Compare the remaining cost of the existing loan with the replacement loan’s payments and all applicable charges.

Should I include refinance fees in the loan amount?
Only if those costs will be added to the amount borrowed. If they are paid separately, keep them separate when comparing total costs. Check the proposed loan documents for how charges are treated.

Why is my lender’s payment different from the calculator?
The lender may use different loan terms, a different amount or APR, payment dates, fees, or rounding conventions. The estimate assumes equal end-of-month payments and monthly compounding; use the lender’s disclosed figures for the exact contract details.

Does this calculator show how much I save by refinancing?
No. It estimates the new loan’s payment and interest only. A savings comparison also needs the existing balance or payoff amount, remaining payments, and costs for both scenarios.

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

Related

• Personal Loan Refinance Calculator: Payment and Interest
• Golden 1 Refinance Auto Loan Calculator
• Home Loan Refinance Calculator and Payment Changes

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