Auto Refinancing Interest Calculator
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Reviewed by Calculator Editorial Team
Refinancing your auto loan can save you money on interest payments. Use this calculator to determine how much you could save by refinancing your current auto loan with a new, lower interest rate.
How to Use This Calculator
To calculate your potential savings from auto refinancing:
- Enter your current auto loan balance
- Enter your current interest rate
- Enter the length of your current loan term in months
- Enter your new interest rate you're considering
- Click "Calculate" to see your estimated savings
The calculator will show you the difference in monthly payments and total interest paid between your current loan and the refinanced loan.
Formula Used
The calculator uses the standard auto loan payment formula to calculate both your current and refinanced monthly payments:
Monthly Payment = P × (r(1 + r)^n) / ((1 + r)^n - 1)
Where:
- P = Loan principal (current balance)
- r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = Number of payments (loan term in months)
The savings are calculated by comparing the total interest paid on both loan options.
Worked Example
Let's say you have a $20,000 auto loan with a 6.5% interest rate over 60 months. You're considering refinancing to a 4.5% rate.
Current monthly payment: $382.50
Refinanced monthly payment: $318.50
Total interest paid with current loan: $1,170.00
Total interest paid with refinanced loan: $570.00
You would save $600.00 in interest by refinancing.
Frequently Asked Questions
How often should I consider refinancing my auto loan?
You should consider refinancing when interest rates drop significantly below your current rate, when you have good credit, and when you can afford the new payment. Generally, refinancing every 2-5 years is common.
What fees should I consider when refinancing?
Common refinancing fees include origination fees (1-3% of loan amount), closing costs (0.5-2% of loan amount), and prepayment penalties (if applicable). These should be factored into your savings calculation.
Can I refinance a car loan with bad credit?
Yes, but you may need to look for special refinancing programs designed for subprime borrowers. These often have higher interest rates and fees.
How long does refinancing take?
The refinancing process typically takes 30-45 days from application to closing. This includes credit checks, loan approval, and paperwork processing.