Refinance vs Keep Your Loan Calculator
Example: Current loan balance: 30000 $ · Current interest rate (APR): 7.5 % · New rate if you refinance (APR): 5.5 % · Months remaining on current loan: 84 months · Refinancing fee (origination + application): 300 $
| Lifetime savings from refinancing | $2,140 |
| Monthly payment reduction | $29 |
| Break-even (months) | 10.33 |
| Current monthly payment | $460 |
| New monthly payment after refi | $431 |
| Interest remaining at current rate | $8,652 |
Worked example
Refinancing $30,000 at 7.5% APR (84 months remaining) to 5.5% APR with a $300 fee cuts the monthly payment by about $30 and saves roughly $2,200 in total interest after the fee. The break-even point is about 10 months — if you hold the loan longer than 10 months, refinancing pays off. On a student loan with federal benefits (income-driven options, forgiveness), check whether refinancing to a private lender costs you those protections before signing.
Frequently asked questions
What fees should I add to the refinancing cost?
Common fees include origination fees (0.5–3% of the loan), application fees ($0–$150), and in rare cases prepayment penalties on the current loan. For student loan refinancing, most lenders charge no origination fee — use $0 in that case. For personal loans, check the lender's fee schedule and add the total here.
Should I refinance federal student loans into a private loan?
Only with extreme caution. Federal loans come with income-driven repayment options, forbearance, deferment, and potential forgiveness programs. Refinancing into a private loan permanently eliminates those protections. The interest-rate savings must be weighed against the value of protections you would lose — especially if your income or employment is uncertain.
When does refinancing NOT make sense?
Refinancing rarely makes sense if you will pay off the loan within the break-even period (e.g., you plan to sell the car in 8 months and break-even is 12). It also does not make sense if the new rate is only marginally lower than your current rate, the fee is high, or the new term is longer (which increases total interest even at a lower rate).
Can I refinance to a different term than I currently have?
Yes, and the term matters as much as the rate. This calculator holds the term constant to isolate the rate effect. If you refinance into a shorter term, your monthly payment may rise but total interest drops dramatically. If you extend the term, the monthly payment falls but you pay more total interest. Run both scenarios before deciding.