Refinance Calculator — Monthly Savings & Break-Even
Enter your current loan balance, interest rate and remaining term, then the new rate, new term and refinancing fees to see your monthly savings, the break-even point and the net lifetime interest saved.
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months
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Reduction in monthly payment after refinancing
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Current monthly payment
25,000 × 0.007083 × 1.4033 ÷ (1.4033 − 1) = 616.21 - 2
New monthly payment
25,000 × 0.004583 × 1.1789 ÷ (1.1789 − 1) = 754.9 - 3
Monthly savings
616.21 − 754.9 = -138.69Reduction in your monthly payment by switching to the new loan terms.
How does this calculator work?
Refinancing saves (old payment − new payment) per month. Break-even = fees ÷ monthly saving. Net lifetime benefit = old total interest − new total interest − fees. A refinance is worthwhile only if you plan to hold the loan past the break-even point. Monthly payment = P × r(1+r)^n / [(1+r)^n − 1].
Formula
How this is calculated
Refinancing replaces your existing loan with a new one — ideally at a lower rate or a more favourable term — while paying off the original balance in full. The key calculation is comparing the total cost (all monthly payments) of keeping the old loan versus taking the new one, then subtracting any one-time refinancing fees.
Each monthly payment M = P × r(1+r)^n / [(1+r)^n − 1] uses the standard amortisation formula, where P is the outstanding principal, r the monthly interest rate (annual rate ÷ 12), and n the number of months. The same formula applies to both the current and new loan. Monthly savings = old payment − new payment. If the new payment is higher (shorter term), monthly savings will be negative — but the total interest cost may still be lower.
The break-even point = refinancing fees ÷ monthly savings tells you how many months you must hold the new loan before the monthly savings repay the upfront fees. If you intend to sell or pay off the loan before break-even, refinancing will cost you more despite the lower rate. Net lifetime savings = (old total interest) − (new total interest) − fees, assuming you hold both loans to maturity. The balance curve shows how the new loan principal declines each month.
Frequently asked questions
Not always — it depends on remaining term, fees and how long you will hold the loan. A slightly lower rate with high fees and only 12 months remaining may never break even. A larger rate drop with a long remaining term almost always saves money. Always check the break-even point against your expected holding period.
Include all one-time costs: origination or processing fees charged by the new lender, any prepayment penalty on your existing loan, title or registration transfer costs, and document fees. For auto loans these are typically $200–$500; for mortgages $2,000–$10,000. Check your current loan contract for prepayment clauses.
This is a common trade-off. A longer term reduces the monthly payment (improving cash flow) but increases total interest paid, even at a lower rate. The net savings figure in this calculator captures the full cost difference. If net savings is negative, the refinance costs you more in total — only worthwhile if the lower monthly payment solves a cash-flow problem.
Also known as
TG we-Calculate Editorial Team. (2026). Refinance Calculator — Monthly Savings & Break-Even [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/refinance-calculator
TG we-Calculate Editorial Team. "Refinance Calculator — Monthly Savings & Break-Even." TG we-Calculate. 2026. https://we-calculate.com/calculator/refinance-calculator.
TG we-Calculate Editorial Team, "Refinance Calculator — Monthly Savings & Break-Even," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/refinance-calculator
@misc{wecalculate_refinance_calculator, title = {Refinance Calculator — Monthly Savings & Break-Even}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/refinance-calculator}}, year = {2026}, note = {TG we-Calculate} }
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