Personal Loan Refinance Calculator: Compare Payments

This personal loan refinance calculator estimates the monthly payment and total interest on a new fixed-rate loan from its amount, APR, and term. Enter figures from a lender’s written offer to see the estimated payment and interest; the result is arithmetic, not a recommendation about whether to refinance or which lender to use.

Formula

The calculator uses the standard fixed-payment amortization formula. It first finds the monthly payment, rounded to the nearest cent, then multiplies that rounded payment by the number of monthly payments and subtracts the amount borrowed to estimate total interest.

• Monthly payment: M = round[P × r / (1 − (1 + r)⁻ⁿ), 2]
• Total interest: I = M × n − P
• Monthly rate: r = APR / 1,200
• Number of payments: n = years × 12

P is the new loan principal in dollars, APR is the annual percentage rate entered as a percentage, r is the monthly rate as a decimal, n is the number of monthly payments, M is the monthly payment in dollars, and I is estimated total interest in dollars. For example, an APR of 8% becomes 0.08 / 12 per month. The APR and term must come from the offer being evaluated; the example defaults are only inputs for demonstrating the calculation.

Worked Example

Using the calculator’s exact defaults: P = $20,000, APR = 8%, and term = 5 years.

1. Convert the annual percentage rate to a monthly decimal: r = 8 / 1,200 = 0.0066667.
2. Convert the term to payments: n = 5 × 12 = 60.
3. Substitute into the payment formula: M = round[20,000 × 0.0066667 / (1 − (1.0066667)⁻⁶⁰), 2] = $405.53 per month.
4. Calculate interest using the rounded monthly payment: I = $405.53 × 60 − $20,000 = $4,331.80.

The total of the 60 scheduled payments is $24,331.80, comprising the $20,000 principal and $4,331.80 estimated interest. Actual payment schedules can differ if a lender uses different timing, rounding, or charges.

Assumptions

• The interest rate is fixed for the full term.
• Payments are equal monthly payments, made at the end of each monthly period.
• Interest accrues monthly using APR divided by 12.
• The calculation excludes origination or other fees, taxes, insurance, and any charges not entered as loan principal or APR.

What Refinancing a Personal Loan Means

Refinancing means taking out a new loan to repay an existing personal loan, then making payments under the new loan’s terms. The new amount may be the remaining payoff balance, but it could differ if a lender includes eligible charges or if the borrower adds funds. The calculator models only the new loan; it does not determine the existing loan’s payoff amount or compare the two automatically.

To assess a comparison, gather the current loan’s payoff quote, remaining number of payments, payment amount, and any charge for paying it off early. Then obtain the new offer’s amount, APR, term, payment schedule, and itemized fees. Compare the cost over the same period and account for how long you expect to keep the debt. A lower monthly payment alone does not establish that the new loan costs less overall: extending repayment can mean paying interest for more months.

How to Use the Result in a Refinance Comparison

Use the calculator to answer a narrow question: what payment and total scheduled interest follow from the new loan’s stated amount, APR, and term under the assumptions above? Run another calculation with a different offer to compare its estimated payment and interest. Keep the inputs consistent with each offer and do not treat the output as a quote.

• Use the amount that would actually be borrowed, not automatically the original loan balance.
• Enter the APR as a percentage, such as 8 for 8%, not 0.08.
• Enter the term in years; the calculator converts it to months.
• Check whether fees are paid separately or added to the new balance. If added, they can increase the amount borrowed and interest.
• Ask the lender for the exact payment schedule and total repayment figures, including charges that this calculator omits.

For a fuller comparison, calculate the remaining scheduled payments on the current loan and compare that amount with the new loan’s total payments plus any costs paid separately. This arithmetic does not account for differences in loan terms, payment dates, or the value of having more cash available each month.

Costs, Limitations, and Common Mistakes

The total-interest result is based on the rounded monthly payment multiplied by the number of payments. Because the payment is rounded to cents, a lender’s final installment may be adjusted slightly to bring the balance to zero. The calculator also assumes the APR represents the rate used for monthly interest; it does not separately itemize fees or calculate a lender’s disclosure.

A frequent misconception is that a smaller payment necessarily means a cheaper loan. A longer term can reduce the required payment while increasing the number of months interest accrues. Conversely, a shorter term may produce a higher payment even when its total interest is lower. Compare both the payment and total cost, and consider any fees using figures supplied by the lender—without assuming that the calculator captures them.

Another mistake is entering the current balance when the new loan amount would include additional borrowing or financed charges. The relevant principal is the amount the new loan would actually disburse. The tool also cannot establish eligibility, predict approval, or account for changes to an existing loan’s payoff balance. Obtain current figures directly from the lender or loan servicer.

Frequently Asked Questions

Who should I refinance a personal loan with?
Use written offers from lenders you are considering and compare their loan amount, APR, term, fees, and payoff process. This calculator does not identify or endorse a lender; request complete terms directly and compare them with your existing loan’s payoff information.

Does refinancing a personal loan lower the monthly payment?
It can, depending on the new principal, rate, and repayment term. A longer term can lower the payment while increasing total interest, so compare the total repayment as well.

Does a lower APR always mean I pay less?
No. The amount borrowed, term, and fees also affect the total cost. A lower APR paired with a substantially longer term may result in more total payments.

Should I include refinance fees in the loan amount?
If the offer adds fees to the principal, include them in the new loan amount for an estimate of payment and interest. If fees are paid separately, keep them separate and add them to the total cost when comparing offers.

What information do I need before comparing a refinance offer?
Get the existing loan’s current payoff amount, remaining payment schedule, and applicable charges, along with the new offer’s principal, APR, term, payment, and itemized fees. Verify all figures with the relevant lender or servicer.

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

Related

• Refinance a Personal Loan After Bankruptcy?
• Personal Loan Refinance Calculator: Payment and Interest
• Personal Loan Refinance Rates: Compare the True Cost

in p | New loan amount | $ | 20000 | 1 | 100000000
in apr | New interest rate (APR) | % | 8 | 0.01 | 100
in yrs | New 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