Car Refinance Calculator
Print| Total Interest Saved | $0.00 |
| New Monthly Payment | $0.00 / mo |
Lower your monthly vehicle payment and save thousands on interest. Use this Car Refinance Calculator to calculate your new monthly auto payment, compare interest rate reductions, evaluate loan term modifications, and determine total net refinancing savings.
The Formula for Auto Loan Refinancing Savings
Calculating the monthly payment drop and net interest savings from refinancing an auto loan involves comparing remaining original loan payments against new amortized loan payments:
Current Remaining Payments Total = Current Monthly Payment × Remaining Months
New Refinanced Monthly Payment = Principal Balance × [r_new(1 + r_new)^n_new] / [(1 + r_new)^n_new - 1]
Total New Refinanced Payments = New Monthly Payment × n_new + Refinancing Title/Doc Fees
Net Refinancing Savings = Current Remaining Payments Total - Total New Refinanced Payments
Where:
- Principal Balance: Outstanding auto loan balance transferred to new lender.
- r_new: New lower annual interest rate (APR divided by 12).
- n_new: New loan term in months (e.g., 36, 48, or 60 months).
Car Refinance Interest Savings Benchmark Matrix
Refer to the lookup table below for net savings estimates refinancing a $25,000 auto loan with 48 remaining months across different APR rate reductions:
| Original Loan APR | Refinanced New APR | Current Monthly Payment | New Refinanced Payment | Total Lifetime Interest Saved |
|---|---|---|---|---|
| 11.0% APR | 6.0% APR (Drop 5.0%) | $646 / month | $587 / month | $2,832 saved ($59/mo drop) |
| 14.0% APR (Subprime) | 6.5% APR (Drop 7.5%) | $684 / month | $593 / month | $4,368 saved ($91/mo drop) |
| 9.0% APR | 5.0% APR (Drop 4.0%) | $622 / month | $576 / month | $2,208 saved ($46/mo drop) |
| 16.0% APR (Dealer Rate) | 7.0% APR (Drop 9.0%) | $709 / month | $599 / month | $5,280 saved ($110/mo drop) |
Step-by-Step Car Refinance Example
Suppose you have $20,000 remaining on an auto loan with 36 months left at 10.0% APR ($645.34/month), and refinance through a credit union into a 36-month loan at 5.0% APR:
- Calculate Total Remaining Cost on Original Loan: $645.34 × 36 months = $23,232.24 remaining outlay.
- Calculate New Monthly Payment at 5.0% APR: $20,000 balance at 5.0% over 36 months = $599.42 per month.
- Calculate Monthly Payment Reduction: $645.34 – $599.42 = $45.92 per month saved.
- Calculate Total New Refinanced Outlay: $599.42 × 36 months + $50 title transfer fee = $21,629.12.
- Calculate Net Lifetime Refinance Savings: $23,232.24 original remaining outlay – $21,629.12 new outlay = $1,603.12 net savings.
Frequently Asked Questions
When is the best time to refinance a car loan?
The best time to refinance a car loan is when your credit score has improved significantly since buying the car, interest rates have dropped nationwide, or you initially accepted a high dealership interest rate.
Are there fees associated with refinancing an auto loan?
Auto refinancing fees are low compared to home mortgages. Lenders typically charge nominal state vehicle title transfer fees ($15 to $100) and small processing fees, which are easily offset by interest savings.
Will refinancing my car extend my loan term?
You can choose your new loan term. While extending your loan term (e.g., from 36 months to 60 months) lowers your monthly payment dramatically, it increases total interest costs. Refinancing into the same or shorter term maximizes total savings.
Can I refinance an auto loan if I am upside down (owe more than the car is worth)?
Most lenders restrict refinancing if your loan-to-value (LTV) ratio exceeds 110% to 125% of the vehicle’s market value. You may need to pay down a small portion of principal first to qualify.