Personal Loan Refinance: The Break-Even Month From Fee and Rate

The quote arrives with a rate and no month. A $30,000 personal loan at 15.99% APR, 60 months, 24 payments made: payoff $20,749.33, payment $729.38. Refinance it at the 12.36% index a 700-score borrower is quoted today¹, on the same 36 months the old loan has left, and the payment drops $15.21. The fee is $622.48. The break-even is month 41 - five months past the payoff date of the loan being refinanced. A lower rate is not a refi - the break-even is. This article computes the month, the payoff shift and the cost from dated inputs, and says act or wait.

A refi is a new contract, not a rate cut

Refinancing replaces an existing debt obligation with a new one under a different term and interest rate². Nothing on the old loan is edited. The payoff is settled, a new note is originated, and three things move at once:

• The rate - the APR on the new contract, set against the dated window at the bottom of this article.
• The term - a new amortization schedule, chosen again from zero: 36 months left, 48, 60.
• The fees - an origination fee on the new loan, usually 1% to 10% of the amount, nonrefundable, deducted before the money reaches the borrower³. The fee is not the price, it is the entry ticket.

That is where the consumer-refi conversation goes wrong. The fee is charged on the whole new balance on day one, while the rate saving arrives a month at a time. A rate delta is a stream; a fee is a wall.

The break-even formula, in one line

break-even month = entry ticket / (old payment - new payment)

The entry ticket is the origination fee plus any prepayment penalty on the loan being closed - a penalty, where the contract carries one, belongs in the same sum as the fee. Two mechanics follow from the fee being deducted from proceeds:

1. The new note carries the fee. A 3% fee on a $20,749.33 payoff is $622.48, and the note is written for $21,391.06, not $20,749.33 - the fee is borrowed at the new rate, $641.73 of principal including the fee’s own financing.
2. The saving is a payment delta, not an interest delta. The formula divides the fee by the monthly payment drop. On a same-term refi that drop is small, because the new payment must amortize the fee too; on an extended term it is large, and that is exactly the trap in the next sections.

The worked case: 24 payments made on a $30,000 loan

The contract: $30,000 at 15.99% APR, 60 months, 24 payments made as of 2026-11-07. Payoff $20,749.33, payment $729.38, and $5,508.44 of interest left to pay if nothing changes. The quote: the Bankrate Monitor index for a 700 FICO score, $5,000, three-year profile - 12.36%, printed 2026-11-04¹. The fee: 3%, deducted from proceeds.

Refinanced at 12.36% on 36 months - the same term left on the old loan:

	Keep the loan	Refi at 12.36%, 36 months
New note	-	$21,391.06
Payment	$729.38	$714.17
Monthly saving	-	$15.21
Entry ticket	-	$622.48
Break-even	-	month 41
Payoff	36 months	36 months
Total outflow to payoff	$26,257.76	$25,710.22

Read the two numbers together, because they answer different questions. On the payment basis the break-even is month 41 ($622.48 / $15.21 = 40.93) - the monthly saving never covers the fee inside the 36 months the loan has left. On the cost basis the refi still nets $547.54 by payoff: the interest saving is $1,189.27, the fee-borne principal gives back $641.73, and what is left is $547.54. Same payoff date, $15.21 a month less, $547.54 cheaper overall. Thin - and thinner with every point of rate you give up.

The 0.75-point trap: break-even month 3, cost $4,437.67

Now the version that gets signed. Same loan, same 3% fee, refinanced 0.75 points lower - 15.24% - on a 60-month note, because the payment looks better at $511.59. The break-even is month 3: $622.48 / $217.79 = 2.86. Fast. The loan is paid off 24 months later than the old one, and it costs $4,437.67 more than keeping the 15.99% loan to maturity.

The payment dropped, the break-even was instant, and the contract bled. A fee recovered in three months is not a saving; it is a fee recovered in three months, and the term is what repays it.

The ladder: every point has a price

The same contract at today’s index, on three terms, and at the rates the window makes plausible:

Refi	Payment	Saving vs $729.38	Break-even	Vs keeping, by payoff
12.36%, 36 mo (same term)	$714.17	$15.21	month 41	saves $547.54
12.99%, 36 mo	$720.65	$8.74	month 72	saves $314.50
13.99%, 36 mo	$730.99	rises $1.61	none	costs $57.94
14.99%, 36 mo	$741.42	rises $12.04	none	costs $433.48
12.36%, 48 mo	$567.10	$162.29	month 4	costs $962.89
12.36%, 60 mo	$479.73	$249.65	month 3	costs $2,526.21

Three readings, all from the same fee. The rate row: at the index the same-term refi nets $547.54; a 0.63-point give-up costs $233.04 of it; 1.6 points above the index and the refi is a $57.94 wash; 2.6 points over and it costs $433.48. The term rows: the payment relief at 48 and 60 months is real - $162.29 and $249.65 a month, break-even in months 4 and 3 - and the extension repays it at $962.89 and $2,526.21. The break-even month is fast precisely when the term is long; that is the trade the brochure does not print.

The act-or-wait threshold

The threshold this desk states: the fee recovered inside 12 months, on a term that does not outrun the loan’s remaining life. On this contract that means a saving of at least $51.87 a month ($622.48 / 12) inside 36 months. The same-term refi at the index saves $15.21 - it misses the 12-month threshold and pays on the cost basis anyway. The 48-month refi saves $162.29, clears it in month 4, and pays $962.89 for the relief.

So the decision is a sequence, not a slogan:

1. Cost basis first. Same-term refi at the index: act - $547.54 by payoff, payoff date unchanged. A quote at 13.99%: don’t - a wash. A 5% fee, $1,037.47 on this payoff, leaves $6.27 of the $547.54 - the fee eats the net.
2. Payment basis second. If the payment is the binding constraint, the 48-month refi is the purchase: $162.29 a month of relief at $962.89. Say the price out loud before signing.
3. Threshold last. Fee recovered in 12 months on a term that ends with the old payoff - here that needs $51.87 a month the rate delta cannot supply on 36 months.

The window, dated

A rate is a point on a dated window: level, slope, duration. The window on 2026-11-07:

• Level. The Bankrate Monitor index for a 700 FICO, $5,000, three-year profile is 12.36%, printed 2026-11-04¹. The Federal Reserve’s G.19 series puts the average commercial-bank 24-month personal loan rate at 11.90% for August 2026⁴; the Fed states its published rates as annual percentage rates under Regulation Z⁵.
• Slope. The same index printed 12.20% on 2026-01-07, its 2026 low of 12.04% on 2026-04-01 and its 2026 high of 12.54% on 2026-10-07⁶⁷⁸. Ten months of weekly prints inside a half-point band: the slope is flat, and weekly moves inside it are noise.
• Duration. The FOMC raised the target range 25 basis points to 3.75%-4.00% on 2026-09-16 by a 12-0 vote⁹. Its September projections put the median path at 4.1% for end-2026 and end-2027, 3.9% for end-2028, 3.6% for end-2029 and 3.2% over the longer run^10111213.

The slope is the act/wait signal. A flat band says the fee math decides now, not a hoped-for print; the median path says the easing arrives in 2028, past the 36 months this loan has left. This window is dated, so is your decision.

Check the quote before signing

• The fee, named. 3%, 6%, 12%? Online-lender origination fees run up to a 12% ceiling, deducted from proceeds¹⁴ - on this payoff a 3% fee is $622.48, a 5% fee is $1,037.47, and the note is written for the payoff grossed up by the fee.
• The payoff figure, not the balance. Refinancing settles the payoff quote on the closing date. Where the old contract carries a prepayment penalty it is a closing cost in the break-even sum; consumer-loan contracts without one are common enough that the absence is not news.
• The term, stated. 48 months is not “the same loan, cheaper”. It is a new loan, and the table above prices the difference: $962.89.
• The date on the rate. Every quote above carries 2026-11-04 or 2026-11-07. A break-even computed from an undated rate is a guess wearing a decimal point.

Mortgage refinancing runs the same arithmetic with points, escrow and closing costs at a scale this desk does not price - the adjacent mortgage niche, not this one.

The call

Month 41 on the payment basis, $547.54 saved on the cost basis, payoff unchanged, window printed 2026-11-04: act at the index on the same term, because the fee is repaid by the interest saving before the loan ends. Take the 12.99% quote instead and the net is $314.50; take 13.99% and you paid $57.94 for the paperwork. Buy the 48-month payment relief only at its price - $162.29 a month for $962.89 - and sign the 0.75-point, 60-month offer only if you know it costs $4,437.67.

The break-even recomputes from three inputs: the fee, the payoff, the delta. All three carry a date here.

Sources and check dates

Source	What it supports	Checked	How
bankrate.com	The Bankrate Monitor personal-loan rate index is 12.36% for a borrower with a 700 FICO score, a $5,000 loan and a three-year term; The Bankrate Monitor index…	2026-11-07	rendered page
federalreserve.gov	The FOMC raised the federal funds target range by 25 basis points to 3.75%-4.00% on 2026-09-16, approved by a 12-0 vote	2026-11-07	rendered page
federalreserve.gov	The September 2026 Summary of Economic Projections puts the median federal funds rate at 4.1% at the end of 2026 and 4.1% at the end of 2027; The September 2…	2026-11-07	rendered page
federalreserve.gov	Federal Reserve G.19 data put the average commercial-bank 24-month personal loan rate at 11.90% in August 2026; The Federal Reserve states its published loan…	2026-10-26	archived snapshot
cnbc.com	A personal-loan origination fee is usually 1% to 10% of the loan amount, is nonrefundable, and is deducted before the borrower receives the proceeds	2026-11-07	live page
en.wikipedia.org	Refinancing is the replacement of an existing debt obligation with another debt obligation under a different term and interest rate	2026-11-07	live page