About the Auto Refinance Calculator
This auto refinance calculator compares the car loan you have today with a refinanced loan at a new interest rate and term. Enter your remaining balance, current rate and months left, then the rate and term a lender or credit union is offering, plus any fees to refinance. You instantly see both monthly payments, the interest you would pay on each loan and your net savings after fees.
It is useful when rates have fallen since you bought the car, when your credit score has improved enough to qualify for a better tier, or when you need a lower monthly payment. Because a longer term can lower the payment while raising the total interest, the calculator shows both numbers side by side so you can tell a real saving from a stretched-out loan.
The comparison assumes a fixed-rate, simple-interest loan with equal monthly payments, which is how most US auto loans work, and that refinance fees are paid upfront rather than rolled into the new balance.
With the default inputs, the net savings after fees is $1,302.44. Change any value above to recalculate instantly.
How to use the auto refinance calculator
- 1Find your payoff balance and months remaining on your latest loan statement.
- 2Enter your current APR.
- 3Enter the rate and term from a refinance quote — match your remaining months for a fair comparison.
- 4Add any fees the lender or DMV charges to switch the title.
- 5Check net savings; a positive number means refinancing pays off overall.
Formula and method
Both payments use the standard amortization formula with the same starting balance B: once with your current rate and months remaining, and once with the new rate and term. The interest on each loan is the total of all payments minus the balance.
Net savings is the interest on the current loan minus the interest on the new loan, less any refinance fees paid upfront. The break-even point divides the fees by the monthly payment reduction. A lower payment is not always a saving: stretching the term adds months of interest, which this comparison makes visible.
- B
- Current loan balance (the amount refinanced)
- r
- Monthly interest rate (APR ÷ 12 ÷ 100)
- n₁, n₂
- Months remaining on the current loan / term of the new loan
- M₁, M₂
- Current and new monthly payments
Worked examples
$22,000 balance, 7.5% down to 4.5% over 48 months
Keeping the same 48 months, the payment falls from $531.94 to $501.68. Interest drops from $3,532.92 to $2,080.48, a $1,452.44 saving, or $1,302.44 after $150 of fees — recovered in about 5 months.
Lower payment but a longer term
Refinancing $18,000 from 9% with 36 months left into a 60-month loan at 6% cuts the payment by about $224. But the extra two years of interest mean you pay $273 more interest, and $473 more once fees are included.
Credit improved: 11.9% to 7.9% on $30,000
Moving to 7.9% and shortening the loan to 48 months raises the payment by about $65, but total interest falls from $9,949 to $5,087 — a $4,862 saving, and the car is paid off a year sooner.
Frequently asked questions
When does it make sense to refinance a car loan?+
Refinancing usually pays off when you can cut your rate by at least one or two percentage points, your credit score has improved since you bought the car, or your original loan came with a marked-up dealer rate. It helps most early in the loan, when more of each payment is interest.
Does refinancing a car hurt your credit?+
Applying causes a hard inquiry, which may lower your score by a few points temporarily, and a new account lowers your average account age. Rate shopping within a short window (typically 14–45 days depending on the scoring model) is usually counted as a single inquiry.
Can I refinance if I owe more than the car is worth?+
Many lenders limit the loan-to-value ratio, often to around 100–125% of the car’s value, so being underwater can make approval harder. Paying the balance down or waiting until the loan catches up with depreciation can help.
What fees are involved in auto refinancing?+
Common costs are a state title transfer or lien recording fee, occasionally a lender origination fee, and a prepayment penalty on the old loan if your contract has one. Most simple-interest auto loans have no prepayment penalty, but check your contract.
Is a lower monthly payment always a saving?+
No. If the new term is longer than your remaining months, you may pay more total interest even at a lower rate. Compare total interest, not just the payment — this calculator shows both.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.
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