Car Refinance Calculator

How Auto Loan Refinancing Works

Refinancing a car loan involves replacing your existing auto loan with a new loan from a different lender, typically offering a lower interest rate, a shorter or longer repayment term, or lower monthly payments. When market interest rates fall or your credit score improves, refinancing can save thousands of dollars in total interest payments over the remaining life of your vehicle loan.

When Should You Refinance Your Car Loan?

• Interest Rates Have Dropped: Market interest rates are lower than when you originally purchased or financed your vehicle.
• Your Credit Score Improved: Higher credit scores qualify you for lower interest rate tiers and reduced annual percentage rates (APR).
• Lower Monthly Payment Needed: Extending the loan term can lower monthly out-of-pocket payment obligations.
• High Original Dealer Financing Rate: Original financing directly through a dealership may have included dealer markup rates.

Car Refinance Calculations

The monthly payment ($PMT$) for an auto loan is computed using standard loan amortization math:

$$PMT = B \cdot \frac{r(1+r)^n}{(1+r)^n - 1}$$

$$\text{Total Net Savings} = (\text{Total Current Remaining Interest} - \text{Total New Interest}) - \text{Upfront Refinance Fees}$$

$$\text{Break-Even Timeline (Months)} = \frac{\text{Upfront Refinancing Fees}}{\text{Monthly Payment Savings}}$$