Refinance a Personal Loan: Compare Payments and Interest

Use this calculator to estimate the monthly payment and total interest on a replacement personal loan when you enter its amount, APR, and term. It calculates the replacement loan’s scheduled costs; compare those figures with your current loan and account separately for any payoff amount or refinancing fees.

Formula

The calculator uses the standard fixed-payment loan formula. First, it estimates the monthly payment from the loan principal, monthly interest rate, and number of monthly payments:

Payment = P × r ÷ [1 − (1 + r)⁻ⁿ]

Here, P is the replacement loan amount in dollars, r is the monthly rate as a decimal (APR ÷ 1,200), and n is the term in months (years × 12). Total interest is then estimated as monthly payment × n − P. The calculator uses the unrounded payment formula in its expressions and displays results to cents; actual lender schedules may differ due to rounding and payment dates.

Worked Example

With the calculator’s default inputs—$20,000, 8% APR, and 5 years—the monthly rate is 0.08 ÷ 12 = 0.0066667, and the term is 5 × 12 = 60 payments.

• Monthly payment = $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] ≈ $405.53.
• Total interest = $405.53 × 60 − $20,000 ≈ $4,331.80.

The total-interest result uses the formula’s unrounded payment before display rounding, so multiplying the displayed $405.53 by 60 may differ by a few cents. A lender’s payment schedule may also use its own rounding conventions.

Assumptions

• The APR and payment remain fixed for the entire term.
• Payments are equal, monthly, and made at the end of each period.
• Interest is compounded monthly at APR divided by 12.
• The estimate excludes refinancing fees, taxes, insurance, and other charges because they are not calculator inputs.

What Refinancing a Personal Loan Means

Refinancing means taking out a new loan to pay off an existing personal loan. The new loan has its own principal, APR, repayment term, and payment schedule. A refinance may change the monthly payment, the total interest over the new loan’s full term, or both. Whether those changes reduce your overall cost depends on the actual payoff amount, new loan terms, fees, and how long repayment continues.

The calculator models the replacement loan, not the decision by itself. Enter the amount needed to cover the existing loan’s payoff if that is the amount being borrowed. A payoff quote can differ from the balance shown on a recent statement because interest may accrue between statement and payment dates, and other charges may apply. Get the exact payoff figure and all costs from the relevant loan documents or lender.

How to Compare the Two Loans

A lower monthly payment does not automatically mean a refinance costs less overall. Extending repayment can lower each payment while increasing the time interest accrues. For a fair comparison, use the remaining schedule on the current loan—not the original term—and include the replacement loan’s full payment period and any fees.

• Record the current balance, payoff amount, APR, remaining number of payments, and scheduled payment.
• Find the proposed replacement loan’s amount, APR, term, payment, and all fees. Treat rates and fees as figures to verify with the lender, not assumptions.
• Compare remaining payments on the current loan with replacement payments plus any costs paid separately or added to the new balance.
• Check whether the new term extends the payoff date. Also consider whether you expect to make extra payments, since this calculator assumes scheduled payments only.

For example, a borrower with 24 payments left might compare that remaining schedule against a new 48-month loan. The longer replacement term could produce a smaller monthly bill but keep the debt outstanding for two additional years. The exact cost comparison requires the actual payment amounts, payoff balance, APRs, fees, and payment timing; the example is not a prediction about any particular offer.

Costs and Common Pitfalls

Potential costs include an origination charge or other fees, depending on the offer. Ask whether charges are paid upfront or deducted from the proceeds, and whether the amount financed differs from the amount needed to clear the old loan. If a fee is added to the balance, the borrower may pay interest on it as well. This calculator does not include fees, so its outputs are not a complete quote.

• Comparing APRs without terms: APR alone does not show the total scheduled cost when repayment periods differ.
• Using the statement balance as the payoff amount: Request a payoff figure valid for the planned payment date.
• Focusing only on monthly payment: A lower payment can reflect a longer term rather than a lower overall cost.
• Ignoring payment history or remaining time: Compare what is still owed from today, not the original loan’s total cost.
• Assuming the estimate is a quote: Exact amounts depend on the final contract, fees, dates, and lender calculations.

Entering the new loan amount and term correctly matters. The amount should reflect the proposed principal, not necessarily the old loan’s original amount. The term is entered in years and converted to monthly periods; a term of 5 means 60 monthly payments in this formula. APR is entered as a percentage such as 8, not as 0.08.

When This Calculator Is Useful—and Its Limits

Use the estimate to understand how a proposed fixed-rate loan’s term and APR affect its payment and scheduled interest. You can change one input at a time to see the arithmetic impact. It can also help identify a key trade-off: shorter terms generally mean fewer payment periods, while longer terms spread repayment over more months.

The calculator cannot determine eligibility, predict a lender’s offer, or establish the precise payoff date for an existing loan. It does not model variable rates, late or extra payments, daily interest accrual, payment-date changes, fees, or other contract terms. For a full comparison, obtain the actual payoff quote and written loan disclosures, then compare all remaining and replacement costs over the same time horizon.

Frequently Asked Questions

Can I refinance a personal loan to get a lower monthly payment?
A longer repayment term or different loan amount can change the payment, but the calculator cannot determine what terms a lender will offer. Compare total scheduled payments and costs as well as the monthly amount.

Does refinancing a personal loan always save interest?
No. The result depends on the replacement APR, term, payoff amount, fees, and remaining schedule on the current loan. A lower payment by itself does not establish that total costs are lower.

Should the new loan amount equal my current balance?
Use the amount actually proposed for the replacement loan. To pay off the old loan, request a payoff quote for the expected payment date; it may not match the latest statement balance.

How do fees affect a refinance comparison?
Fees can add to the total cost or increase the amount borrowed if financed. This calculator excludes them, so account for each charge separately using figures in the lender’s disclosure.

What does the total-interest result include?
It estimates interest over every scheduled monthly payment on the replacement loan under a fixed APR and equal-payment assumptions. It does not include fees or costs from the existing loan.

This result is an estimate, 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