APR vs term vs total cost
Many refinance decisions are not “good” or “bad”. They are tradeoffs between monthly pressure and total cost over time.
APR changes the price of money
APR influences how much interest accrues on the remaining balance each month. A higher balance makes the same APR more expensive in dollars.
Term changes how long you pay
A longer term can reduce the payment by spreading principal across more months. But it can increase total interest if you remain in the loan longer.
A practical comparison
- If payment relief is critical, focus on whether the relief is worth the extra total cost.
- If total cost is the goal, prioritize APR drop and avoid extending the term unless needed.
- Include fees and break-even timing in the decision.