Bankrate Auto Loan Refinance Calculator

Refinancing your auto loan can save you money if you qualify for better terms. Our Bankrate Auto Loan Refinance Calculator helps you estimate potential savings by comparing your current loan with a new refinance option.

How to Use This Calculator

To use this calculator, enter your current loan details and the proposed refinance terms. The calculator will show you the estimated monthly savings and total savings over the life of the loan.

Enter your current loan balance
Enter your current interest rate
Enter your current loan term in months
Enter your proposed refinance interest rate
Enter your proposed refinance term in months
Click "Calculate" to see your results

Formula Used

The calculator uses the standard loan payment formula to calculate monthly payments for both your current loan and the refinance option. The formula is:

Monthly Payment = P × (r(1 + r)^n) / ((1 + r)^n - 1)

Where:

P = Principal loan amount
r = Monthly interest rate (annual rate divided by 12)
n = Number of payments (loan term in months)

The calculator then compares the monthly payments and calculates the total savings over the life of the loan.

Worked Example

Let's say you have a $20,000 auto loan with a 6.5% APR and a 60-month term. You're considering refinancing to a 4.5% APR with a 72-month term.

Loan Type	Balance	APR	Term	Monthly Payment	Total Interest
Current Loan	$20,000	6.5%	60 months	$387.50	$750.00
Refinance Option	$20,000	4.5%	72 months	$312.50	$300.00

In this example, you would save $75 per month and $450 in total interest by refinancing.

Key Considerations

Credit Score Requirements

Most auto refinances require a good to excellent credit score. Lenders typically look for a score of 660 or higher, though some may accept scores as low as 620.

Loan-to-Value Ratio

The LTV ratio compares your loan amount to the value of your vehicle. Most refinances require an LTV of 80% or less, though some lenders may accept higher ratios.

Fees and Costs

Refinancing typically involves origination fees, application fees, and closing costs. These can range from $500 to $2,000 depending on the lender and your credit profile.

Before refinancing, make sure you understand all the costs involved and compare them with the potential savings.

Frequently Asked Questions

How long does it take to refinance an auto loan?: The refinancing process typically takes 30 to 60 days, though some lenders may offer faster processing for approved applicants.
Can I refinance a car loan with bad credit?: Yes, but you may need to pay higher interest rates and fees. Specialized lenders cater to subprime borrowers with credit scores below 600.
Will refinancing hurt my credit score?: Refinancing can temporarily lower your credit score as it appears as a hard inquiry on your credit report. However, if you qualify for better terms, the long-term benefits may outweigh this short-term impact.
Can I refinance a car loan with a balloon payment?: Yes, but you'll need to pay off the remaining balance at the end of the term. This option can be useful if you expect to sell or trade in the vehicle before the balloon payment is due.
What happens if I can't make payments on a refinanced loan?: If you're unable to make payments, contact your lender immediately. They may offer options like loan modifications, forbearance, or repayment plans to help you avoid default.