Refinance a Personal Loan for Cash Out?

You generally cannot refinance a personal loan for cash out in the same way homeowners refinance a mortgage: an unsecured personal loan does not have home equity to withdraw. You may be able to replace it with a larger new personal loan and use the amount left after paying off the old balance, if a lender offers that structure and approves the application.

Formula

This calculator estimates the monthly payment and total interest on a new, fixed-rate personal loan. It does not calculate cash available after refinancing; that depends on the old loan payoff amount, new loan amount, and any fees paid from the proceeds.

The level-payment formula is:

• Monthly payment = P × r / [1 − (1 + r)⁻ⁿ]
• Total interest = monthly payment × n − P

P is the new loan principal in dollars, r is the monthly interest rate as a decimal (APR ÷ 1,200), and n is the number of monthly payments (term in years × 12). The calculator assumes a fixed APR and level monthly payments. The displayed formula uses the unrounded payment internally; actual lender schedules may differ because payments and interest are rounded under the lender’s terms.

Worked Example

Using the defaults—$20,000 borrowed, 8% APR, and a five-year term:

• Monthly rate: 8 ÷ 1,200 = 0.0066667.
• Number of payments: 5 × 12 = 60.
• Monthly payment: 20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] ≈ $405.53.
• Total interest using the calculator’s unrounded payment: approximately $4,331.69.

These are estimates from the stated formula, rounded for display. The lender’s payment schedule can vary with its rounding, payment dates, fees, and contract terms.

Assumptions

• The APR and payment remain fixed throughout the term.
• Payments are made monthly, with the first payment one month after borrowing.
• Interest compounds monthly at APR ÷ 12 for this estimate.
• Fees, taxes, insurance, and any optional products are not included.

How Cash-Out Refinancing a Personal Loan Works

Refinancing means taking a new loan to pay off an existing one. In a cash-out arrangement, the new loan is larger than the amount needed to settle the old debt, and the difference is made available to the borrower. Personal loans are generally unsecured, so there is no property value or equity from which the cash is drawn. “Cash out” describes the difference between the new borrowing and the old payoff, not a special source of collateral.

For example, suppose the payoff quote on an existing loan is $7,200 and a new loan is $10,000. Before any fees or deductions, the apparent difference is $2,800. If $300 in charges are financed or withheld, the usable amount could be lower. The exact payoff quote matters: the current account balance may not include interest accrued through the payoff date or other contract amounts.

A lender might instead require the new loan to be only large enough to pay off the old one, or might not offer a cash-out structure at all. Confirm how proceeds are disbursed and whether the lender pays the old creditor directly or sends funds to you.

How to Estimate the Cash You Would Receive

The payment calculator above helps estimate the cost of the proposed new loan, but it does not determine net cash. To estimate that amount, use this relationship:

Estimated cash received = new loan proceeds − old loan payoff − charges deducted from proceeds.

Use written figures for the payoff and the new loan’s amount and fees. Also check whether any fee is paid upfront, deducted from proceeds, or added to the balance; those choices change the cash in hand and the total amount repaid. If the new loan pays off only part of the old balance, the remaining old debt continues separately.

Compare the Full Cost, Not Just the Payment

A lower monthly payment does not by itself mean borrowing is less expensive. A longer term can reduce each payment while increasing the total interest paid, and a larger principal can raise both payment and total cost. Compare the proposed loan with keeping the current loan, using the remaining payments and balances—not just the original amount borrowed.

• Compare APRs and total repayment over each loan’s remaining or proposed term.
• Include origination or other charges, and identify whether they are financed or deducted.
• Check whether the old loan has a prepayment charge or other payoff condition in its contract.
• Consider the cash actually received alongside the new debt and payment schedule.
• Verify whether the new loan is fixed-rate or variable-rate and whether payment terms can change.

Ask for a written disclosure showing the amount financed, payment, number of payments, APR, fees, and total repayment. A calculator cannot determine eligibility, the terms a lender may offer, or the exact payoff amount.

Common Problems and Alternatives

One common misunderstanding is that refinancing automatically releases money. It does not: cash is available only if the new borrowing exceeds the old payoff and deductions, and the lender permits that arrangement. Another is to compare only monthly payments. A longer repayment period can make a payment look smaller while keeping debt outstanding for more time.

If a cash-out refinance is unavailable, possible alternatives to examine include a separate personal loan, a line of credit, or negotiating a payment arrangement with the organization owed. Each has different costs, repayment terms, and risks; compare written terms rather than assuming one is cheaper. Borrowing more also increases the amount that must be repaid, and missed payments can have consequences under the loan agreement. This calculator does not assess those outcomes or provide financial advice.

Frequently Asked Questions

Can I refinance a personal loan and get extra cash?
Possibly. It depends on whether a lender offers a new loan larger than the payoff amount and approves the application. The net amount is reduced by any charges or deductions.

Is cash-out refinancing the same as taking a second personal loan?
No. A refinance replaces an existing loan with a new one intended to pay it off. A separate loan leaves the original debt in place unless you use the new proceeds to repay it.

Does a larger refinance loan always mean I receive the difference in cash?
No. Fees, payoff amounts, disbursement rules, or the lender’s product terms can reduce or prevent a cash payment. Ask for the net proceeds in writing.

Will refinancing lower my monthly payment?
Not necessarily. Payment depends on the new balance, APR, and term. Extending the term may lower the payment but can increase total interest; this calculator estimates a payment only for the inputs entered.

What figures should I get before comparing offers?
Get the current payoff quote, the proposed amount financed, APR, fees, payment amount, term, total repayment, and estimated net proceeds. Check the loan disclosures and existing contract for applicable terms.

This result is an estimate; the lender’s disclosure gives the exact figures.

Related

• Loan Depot Refinance Rates: Calculate Your Payment
• Refinance a Personal Loan Into a Home Equity Loan?
• Refinance a Personal Loan Into a Shorter Term?

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 | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2