Refinancing a car loan replaces your current loan with a new one, ideally at a lower interest rate. The question is never just “will my payment go down?” — a longer term can lower the payment while raising the total you pay. This calculator compares what you still owe on the current loan with the full cost of the new one, fees included, so you can see the real savings.
How to use the auto refinance calculator
- Enter your current loan balance (the payoff figure from your lender), the current APR and the number of payments left.
- Enter the new APR you have been offered and pick the new term.
- Add any refinance fees — title transfer, lien recording or lender fees — and tick the box if they will be added to the new loan instead of paid in cash.
- Read the total savings, then check the term table to see how the choice of term changes the result.
How refinance savings are calculated
Both loans use the standard amortizing payment formula:
where P is the balance, r the APR ÷ 12 and n the number of months. Then:
The current payment is recomputed from your balance, rate and remaining months, which matches your actual payment for a standard simple-interest auto loan that is on schedule.
Worked example
You owe $22,000 at 9.5% with 48 payments left. A credit union offers 6.0% for 48 months, with $250 in title and registration fees paid up front.
Current payment = $552.71 → still to pay 48 × 552.71 = $26,530.03
New payment = $516.67 → 48 × 516.67 + 250 = $25,050.19
Savings = $1,479.84; the $36.04 monthly saving recovers the fees in 7 months
Choosing 72 months instead drops the payment to $364.60, but the savings shrink to about $29, and at 84 months refinancing costs about $717 more than keeping the old loan. The lower rate is real; the extra months of interest simply consume it.
Ways to get more out of a refinance
- Keep the term the same or shorter. You capture the full rate savings and finish on schedule.
- Keep paying your old amount. If you refinance to a lower payment but keep sending the old payment, the extra goes to principal and the loan ends early.
- Shop several lenders in a short window. Banks, credit unions and online lenders price auto loans differently.
- Watch for being upside down. Lenders may decline or charge more if you owe more than the car is worth. The car depreciation calculator estimates the current value.
For a new purchase rather than a refinance, start with the car loan calculator; for a home loan, the mortgage refinance calculator handles closing costs and longer terms.
Results are estimates for planning and not financial advice. Your lender's payoff letter and the new loan's Truth in Lending disclosure give the exact figures.
Frequently asked questions
When does refinancing a car loan make sense?
It usually pays when you can cut the rate meaningfully — because your credit has improved, rates have fallen, or the original loan was marked up at the dealer — and you keep the new term no longer than the time left on the old loan. Check the total cost, not only the monthly payment.
Can refinancing lower my payment but cost more?
Yes. Stretching 48 remaining months into a new 72- or 84-month loan lowers the payment mostly by spreading the balance over more months, and the extra months of interest can wipe out the benefit of a lower rate. The table of terms shows the point where savings turn negative.
What fees come with an auto refinance?
Many lenders charge no application fee, but you may pay a state title transfer or lien recording fee, and occasionally an origination fee. Your current lender may charge a prepayment penalty, although many auto loans have none. Add all of these in the fees field.
Does refinancing hurt my credit score?
Applying usually triggers a hard inquiry, which can lower a score slightly for a short time, and the new account lowers your average account age. Rate shopping for the same type of loan within a short window is generally treated as a single inquiry by common scoring models.