This calculator estimates the monthly payment and total interest for a fixed-rate personal loan using the amount, APR, and term you enter. Use it to model a possible refinance loan; comparing that estimate with your current loan requires checking its payoff balance, remaining payments, and any fees with your lender.
Formula
The calculator uses the standard fixed-payment loan formula. It first converts the annual percentage rate (APR) to a monthly rate, then calculates the payment that repays the principal and interest over the selected number of months.
Monthly payment = P × r ÷ [1 − (1 + r)−n], where r = APR ÷ 1,200 and n = years × 12. Total interest = monthly payment × n − P.
- P is the loan amount, in dollars.
- APR is the annual percentage rate entered as a percent, such as 8 for 8%.
- r is the monthly rate as a decimal.
- n is the number of monthly payments.
The interest output uses the displayed monthly payment multiplied by the number of months, then subtracts principal. The payment itself is displayed to cents. This is a comparison estimate, not a payoff quote or a calculation of your existing loan’s remaining interest.
Worked Example
Using the defaults—$20,000, 8% APR, and five years—the term is 5 × 12 = 60 monthly payments. The monthly rate is 8 ÷ 1,200 = 0.0066667.
Monthly payment = 20,000 × 0.0066667 ÷ [1 − (1.0066667)−60] = $405.53 after rounding to cents.
Total interest = $405.53 × 60 − $20,000 = $4,331.80. These are the calculator’s results for its default inputs.
Assumptions
- The APR and payment remain fixed throughout the modeled term.
- Payments are made monthly, with the first payment one month after borrowing.
- Interest compounds monthly at APR divided by 12.
- The estimate excludes origination or other fees, taxes, insurance, and any charges not entered as inputs.
When Refinancing and Paying Off Differ
Refinancing replaces an existing loan with a new one. The new loan may have a different principal, APR, term, payment, and fees. Paying off a loan means clearing the outstanding balance, either on schedule or early. If you already have the cash to pay it off, compare the lender’s payoff amount with the cost and consequences of using that cash; this calculator does not model the value of keeping savings available.
For a refinance comparison, the relevant new-loan amount is generally the amount needed to settle the old debt plus any costs rolled into the new borrowing—not necessarily the original amount borrowed. Ask the current lender for a dated payoff quote, since the amount can differ from the balance shown on a past statement. Ask the prospective lender for its payment schedule and a written breakdown of fees. Enter the applicable new principal, APR, and term here to see an estimate of the new loan’s scheduled payment and interest.
How to Compare the Options
A lower monthly payment does not automatically mean a lower overall cost. A longer term can reduce each payment while extending the time interest accrues. Compare the remaining cost of the current loan against the new loan’s total payments and fees, and use the same comparison period where possible.
- Get the current payoff figure. Confirm the amount and date through the loan servicer, and ask whether any payoff charges apply.
- Check remaining payments. Use the current payment schedule to estimate what you would pay if you kept the loan. Do not compare a new five-year total with only one year of old-loan payments.
- Include refinance costs. Consider fees paid upfront and costs added to the new balance. A fee financed into the loan also accrues interest.
- Compare term and flexibility. Note when each loan would be paid off and check the contract for relevant conditions, including extra-payment or early-payoff terms.
- Consider cash reserves. A payoff uses money that may otherwise remain available for emergencies or other expenses. The calculator cannot assign a value to that trade-off.
For example, a refinance that lowers the payment by extending the term may still result in more total payments than keeping a nearly paid-off loan. Conversely, if the remaining schedule is long, a materially different loan offer could change the comparison—but fees, timing, and the amount actually financed still matter. The example is illustrative; use lender-provided figures rather than assuming any rate or fee.
Common Mistakes and Limits
Do not treat the calculator’s total-interest figure as the exact amount you will save by refinancing. It represents estimated interest over the full modeled new term, not the old loan’s remaining interest, and it excludes costs unless they are included in the entered principal. A sound comparison needs both loans’ remaining cash flows and any one-time costs.
Another common mistake is comparing payments without comparing payoff dates. If the new term is longer, a lower payment can come with a longer obligation. Also check that the quoted APR and term correspond to the offer you are evaluating; a rate shown in an advertisement or preliminary estimate may not match a final disclosure.
This formula assumes regular, equal monthly payments and a fixed APR. Actual schedules can differ because of payment dates, rounding, fees, or contract terms. It does not calculate a variable-rate loan, predict approval, or determine whether a lender will offer the inputs you enter. Get actual terms and the current payoff amount directly from the relevant lender.
Frequently Asked Questions
Should I refinance or pay off my personal loan?
There is no universal answer from the payment estimate alone. Compare the current payoff amount and remaining payments with the new loan’s total payments, term, and fees; also consider the cash used for an early payoff.
Does a lower monthly payment mean refinancing saves money?
No. A lower payment may reflect a longer repayment term. Compare total payments and costs over the relevant period as well as the monthly amount.
How do I find my personal-loan payoff amount?
Request a dated payoff quote from the lender or servicer. A statement balance may not reflect interest accrued through the date the loan is actually paid.
Should I include refinance fees in the loan amount?
If a fee is added to the amount borrowed, include it in the modeled principal. For fees paid separately, compare them as an additional cost alongside the calculator’s results.
Can I use this calculator for my existing loan?
You can estimate payments and interest for a fixed-rate loan from its principal, APR, and original term. It does not calculate the current balance or remaining interest without additional loan-history information.
This result is an estimate; the lender’s disclosure gives the exact figures.
Related
Formula used
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
Each line is one input (in, sel, list) or one result (out: label, unit, formula, decimals). How the calculators work
Method: the standard loan formula for this calculation, fixed rate and monthly compounding unless stated, rounded as each result states. Not financial advice; no lender, rate or product is recommended. See formulas and assumptions, the disclaimer or report an error.
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