Cut Your Loan Costs Calculator
If you took out a personal loan some time ago, there is a reasonable chance a better rate is available now, particularly if your credit profile has improved or the wider market has moved since you originally borrowed. Refinancing — replacing your current loan with a new one on better terms — can genuinely reduce what you pay overall, but it is not automatically the right move in every situation. This calculator compares your current loan against a specific refinancing option, including any exit charge, to show whether it actually saves money in your case.
Cut Existing Loan Costs
Find out how much you could save by refinancing your existing loan at a lower rate.
Refinancing Isn’t Automatically Cheaper
A lower interest rate on paper does not always translate into a genuine saving once every cost of switching is accounted for — an early repayment charge on the loan you are leaving, combined with the shape of the new loan’s term, can sometimes offset or even exceed what the lower rate would otherwise save. This calculator deliberately includes the exit charge in its comparison, since leaving it out is one of the more common ways a refinancing decision looks better on paper than it actually turns out to be in practice.
This is why the calculator shows a clear net saving figure, and explicitly flags when refinancing does not save money at all under the numbers entered, rather than simply presenting two payment amounts side by side and leaving the comparison to be worked out manually.
Where the Early Repayment Charge Fits In
UK lenders are permitted to charge an early repayment charge if you clear a personal loan before the end of its term, typically capped at a maximum equivalent to a set number of months’ interest under FCA rules, though the exact amount varies by lender and loan agreement. This is not necessarily a reason to avoid refinancing altogether — it simply needs to be weighed against the saving a new rate would produce over the loan’s remaining term, which is exactly what this calculator does by including it directly in the total cost comparison rather than treating it as a separate, easy-to-overlook figure.
Some loans, particularly those taken out more recently or from certain lenders, charge no early repayment fee at all — checking your specific agreement rather than assuming a charge applies is worth doing before ruling refinancing out based on an ERC that may not actually exist for your loan.
The Term Length Trap
Refinancing to a longer term than your loan currently has left can lower your monthly payment noticeably, which understandably looks attractive on a monthly budget — but a longer term at even a lower rate can sometimes cost more in total interest over the full period than continuing with the shorter remaining term on the original loan would have. This calculator compares total cost, not just the monthly figure, specifically to catch this trap: a smaller monthly payment and a genuinely lower total cost are not the same thing, and it is easy to focus on the more visible monthly number while missing the total.
Two Refinancing Scenarios, Two Outcomes
A £10,000 balance at 12% APR with two years remaining, refinanced to 8% APR over the same two-year term with a £150 exit charge, produces a genuine net saving — the lower rate outweighs the fixed exit cost comfortably within the same timeframe. The same £10,000 balance refinanced to 8% APR but stretched over four years instead of two can show a lower monthly payment, yet a higher total cost once the extra two years of interest are added up, despite the better headline rate — exactly the term-length trap this calculator is built to catch.
When It’s Actually One Loan Too Many
If refinancing a single loan is not producing a meaningful saving, it is worth stepping back and asking a slightly different question — particularly if you are managing more than one loan or credit commitment at the same time. Combining multiple debts into a single consolidation loan can sometimes achieve a better overall outcome than refinancing each one individually, by simplifying repayments into one and potentially securing a better blended rate across the total balance. Our Debt Consolidation Calculator looks specifically at that scenario. If you are simply exploring a fresh personal loan rather than refinancing an existing one, our Personal Loan Calculator is the more direct tool for that.
Frequently Asked Questions
Will refinancing affect my credit score?
Applying for a new loan typically involves a credit check, which can cause a small, temporary dip in your score. Closing the old loan and opening a new one also changes your credit history profile, though the long-term effect of a lower monthly commitment can be positive if you manage the new loan well.
Can I refinance if my credit has gotten worse since I first borrowed?
You can apply, but a worse credit profile than when you originally borrowed may mean you are offered a higher rate than your current loan, rather than a lower one, making refinancing counterproductive in that specific situation.
Is there a minimum amount of time I need to have had a loan before refinancing?
There is no universal rule, though some lenders may have their own minimum period before allowing early settlement, and any early repayment charge is typically set out clearly in your original loan agreement.
Do I need to refinance with a different lender?
Not necessarily — some lenders offer existing customers a better rate directly if you ask, without a full switch to another provider, which is worth checking before assuming a new lender is required.
What information do I need to run this calculation accurately?
Your current loan’s remaining balance, APR and remaining term, plus the APR, term and any exit charge for the refinancing option you are considering — all of which should be available from your current loan agreement and a quote from the new lender.
Does overpaying my current loan achieve something similar to refinancing?
It can — many loans allow overpayments, sometimes with a small charge, which reduces the balance and total interest without needing to refinance at all. This is worth comparing against a full refinance, since it avoids both a new credit application and any exit charge entirely.
Important Information
This calculator provides an estimate based on the figures you enter and does not constitute financial advice. It does not check eligibility for any specific loan, and actual rates, terms and charges vary by lender. For advice specific to your circumstances, consult a qualified financial adviser. See our Disclaimer for further information.