Potential Total Interest Saved:
Based on refinancing your loan.
Understanding the Loan Savings Calculator
This Loan Savings Calculator is designed to help you determine the potential financial benefits of refinancing or consolidating an existing loan. By comparing the total interest paid on your current loan with the total interest paid on a potential new loan, you can make informed decisions about managing your debt. This tool is particularly useful when considering lower interest rates or different repayment terms.
How it Works: The Math Behind the Savings
The calculator uses the standard formula for calculating monthly loan payments (the amortization formula), and then projects the total interest paid over the life of each loan. The difference between these two figures represents your potential savings.
n = Total Number of Payments (Loan Term in Months)
Total Interest Paid Calculation:
Total Interest = (Monthly Payment * Number of Months) – Principal Loan Amount
The calculator performs these calculations for both your current loan and the potential new loan. The savings are then computed by subtracting the total interest of the new loan from the total interest of the current loan.
When to Use This Calculator:
Refinancing for a Lower Interest Rate: If market rates have dropped or your credit score has improved, you might qualify for a lower APR. This calculator shows how much you could save on interest.
Consolidating Debt: If you have multiple loans, consolidating them into one new loan can simplify payments. This calculator helps assess if the new loan's terms (rate and term) will result in overall interest savings.
Adjusting Loan Term: Sometimes, extending or shortening a loan term can impact total interest paid. Compare different scenarios to see the effect.
Important Considerations:
Fees: Refinancing often involves closing costs and fees. Ensure these are factored into your decision; the calculator focuses purely on interest savings.
Credit Score: Your creditworthiness significantly impacts the interest rates you qualify for.
Loan Type: This calculator is general. Specific loan types (e.g., mortgages, auto loans, personal loans) may have unique terms or calculation nuances.
Use this tool to estimate your potential savings, but always consult with your lender for precise figures and to understand all associated costs and terms.
function calculateLoanInterest(principal, annualRate, termMonths) {
var monthlyRate = annualRate / 100 / 12;
var numberOfPayments = termMonths;
var monthlyPayment = 0;
var totalInterest = 0;
if (monthlyRate === 0) {
monthlyPayment = principal / numberOfPayments;
} else {
monthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// Check for NaN or Infinity due to invalid inputs
if (isNaN(monthlyPayment) || !isFinite(monthlyPayment)) {
return { monthlyPayment: 0, totalInterest: 0 };
}
var totalPaid = monthlyPayment * numberOfPayments;
totalInterest = totalPaid – principal;
// Ensure interest is not negative (can happen with very short terms or specific edge cases)
if (totalInterest < 0) {
totalInterest = 0;
}
return { monthlyPayment: monthlyPayment, totalInterest: totalInterest };
}
function calculateSavings() {
var currentLoanAmount = parseFloat(document.getElementById("currentLoanAmount").value);
var currentInterestRate = parseFloat(document.getElementById("currentInterestRate").value);
var currentLoanTermMonths = parseFloat(document.getElementById("currentLoanTermMonths").value);
var newLoanAmount = parseFloat(document.getElementById("newLoanAmount").value);
var newInterestRate = parseFloat(document.getElementById("newInterestRate").value);
var newLoanTermMonths = parseFloat(document.getElementById("newLoanTermMonths").value);
var resultDiv = document.getElementById("result");
var totalInterestSavedSpan = document.getElementById("totalInterestSaved");
// Input validation
if (isNaN(currentLoanAmount) || currentLoanAmount <= 0 ||
isNaN(currentInterestRate) || currentInterestRate < 0 ||
isNaN(currentLoanTermMonths) || currentLoanTermMonths <= 0 ||
isNaN(newLoanAmount) || newLoanAmount <= 0 ||
isNaN(newInterestRate) || newInterestRate < 0 ||
isNaN(newLoanTermMonths) || newLoanTermMonths <= 0) {
resultDiv.style.display = "none";
alert("Please enter valid positive numbers for all fields.");
return;
}
var currentLoanInterestInfo = calculateLoanInterest(currentLoanAmount, currentInterestRate, currentLoanTermMonths);
var newLoanInterestInfo = calculateLoanInterest(newLoanAmount, newInterestRate, newLoanTermMonths);
var totalInterestSaved = currentLoanInterestInfo.totalInterest – newLoanInterestInfo.totalInterest;
// Ensure savings are not negative
if (totalInterestSaved < 0) {
totalInterestSaved = 0;
}
totalInterestSavedSpan.textContent = "$" + totalInterestSaved.toFixed(2);
resultDiv.style.display = "block";
}