See how much you could save by switching to a lower interest rate.
New Monthly Payment:$0.00
Monthly Savings:$0.00
Total Lifetime Savings:$0.00
How Refinancing a Personal Loan Works
Refinancing a personal loan involves taking out a new loan with better terms—typically a lower interest rate—to pay off your existing debt. This strategy is most effective when your credit score has improved since you first applied for the loan or when market interest rates have dropped.
Example: The Power of a Lower APR
Imagine you have a $15,000 balance remaining on a loan with a 15% APR and 36 months left. Your monthly payment is roughly $520. If you refinance into a new 36-month loan at 8% APR:
New Monthly Payment: ~$470
Monthly Savings: $50
Total Interest Saved: Over $1,800 across the life of the loan.
When Should You Refinance?
1. Better Credit Score: If your score moved from "Fair" to "Excellent," you're likely eligible for significantly lower rates.
2. Lower Market Rates: Economic shifts can drive down APRs across the board.
3. Improved Debt-to-Income Ratio: If your income has increased, lenders view you as lower risk, which translates to better offers.
Important Considerations
Before signing a new loan agreement, check for origination fees on the new loan and prepayment penalties on your old one. Ensure the total savings calculated above outweigh any administrative costs associated with switching loans.
function calculateRefi() {
var balance = parseFloat(document.getElementById('currentBalance').value);
var currentPayment = parseFloat(document.getElementById('currentPayment').value);
var remainingMonths = parseFloat(document.getElementById('remainingMonths').value);
var newRate = parseFloat(document.getElementById('newRate').value);
var newTerm = parseFloat(document.getElementById('newTerm').value);
if (isNaN(balance) || isNaN(currentPayment) || isNaN(remainingMonths) || isNaN(newRate) || isNaN(newTerm)) {
alert("Please enter valid numbers in all fields.");
return;
}
// Monthly interest rate calculation
var monthlyRate = (newRate / 100) / 12;
// New Monthly Payment Formula: P = [r*PV] / [1 – (1+r)^-n]
var newPayment;
if (monthlyRate === 0) {
newPayment = balance / newTerm;
} else {
newPayment = (monthlyRate * balance) / (1 – Math.pow(1 + monthlyRate, -newTerm));
}
var monthlySavings = currentPayment – newPayment;
// Calculate total cost of current remaining loan
var currentTotalCost = currentPayment * remainingMonths;
// Calculate total cost of new loan
var newTotalCost = newPayment * newTerm;
var totalSavings = currentTotalCost – newTotalCost;
// Display Results
document.getElementById('resultsBox').style.display = 'block';
document.getElementById('newMonthlyPayment').innerText = '$' + newPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('monthlySavings').innerText = '$' + monthlySavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalLifetimeSavings').innerText = '$' + totalSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Scroll to results on mobile
if (window.innerWidth < 600) {
document.getElementById('resultsBox').scrollIntoView({ behavior: 'smooth' });
}
}