This calculator works for student loans, mortgages, credit card debt, just about any type of loan.
Interested in consolidating multiple loans into one loan? Check out our Loan Consolidation Calculator.
- Balance - how much you currently owe.
- Monthly Payment - your current minimum payment.
- Interest Rate - the interest rate on your current loan.
- New Loan Refinance Amount - how much you want to refinance, typically the current balance, but you can adjust if needed.
- New Loan Interest Rate - the interest rate for your new loan, you want this to be as low as possible.
- New Loan Term - how many years the new loan will last for.
- Refinance Cost - what the bank will charge you to get into the new loan, common when refinancing a home.
The typical purpose of refinancing is to:
- Get a lower interest rate! That will lower your payment and also very importantly save you money over the life of the loan (since less is going to the bank).
- Lower your total out of pocket for the life of the loan! This is computed in the bottom right corner of the results table. A green value is good, meaning you will save money overall with the new loan. A red value means the new loan is costing you money.
Things to consider when it comes to loan refinancing:
- A lower monthly payment is often a positive benefit of consolidating several loans into one, but it may come with a longer term and higher total interest costs.
- Increasing the duration of a loan (which lowers the payment) can come with consequences. For example, if you go with a 7 year loan on a car just so you can make the payment 'work' you may find that a longer loan term will make the payment less, but it will drastically increase the total cost of the loan. That would make the car even less affordable over time. While a loan has an outstanding balance the clock is ticking on the interest. The bank likes it that way. The longer the duration of the loan, the more that clock ticks. A longer duration loan can provide flexibility in the form of a lower minimum payment if you are allowed to pay ahead on the loan without penalty.
- If you are able to consolidate loans into a home equity loan or line of credit, you may be able to get a tax deduction on the interest.