Bankrate Auto Refinance Calculator
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Reviewed by Calculator Editorial Team
Use this Bankrate Auto Refinance Calculator to determine if refinancing your auto loan will save you money. Compare current loan terms with potential refinanced terms to make an informed decision about whether to refinance.
How to Use This Calculator
To use this calculator, follow these steps:
- Enter your current loan balance in the "Current Loan Balance" field.
- Enter your current interest rate in the "Current Interest Rate" field.
- Enter the remaining term of your current loan in the "Current Loan Term" field.
- Enter the new interest rate you're considering in the "New Interest Rate" field.
- Enter the new loan term you're considering in the "New Loan Term" field.
- Click the "Calculate" button to see your potential savings.
The calculator will display your current monthly payment, new monthly payment, and potential savings if you refinance.
Formula Used
The calculator uses the standard auto loan payment formula to calculate monthly payments:
Monthly Payment = P * (r(1 + r)^n) / ((1 + r)^n - 1)
Where:
- P = Loan principal (current loan balance)
- r = Monthly interest rate (annual rate divided by 12)
- n = Number of payments (loan term in months)
The calculator then compares the current monthly payment with the new monthly payment to determine potential savings.
Worked Example
Let's look at an example to see how the calculator works.
Example Scenario
- Current Loan Balance: $20,000
- Current Interest Rate: 6.5% APR
- Current Loan Term: 48 months
- New Interest Rate: 4.5% APR
- New Loan Term: 60 months
Using the formula:
Current Monthly Payment = $20,000 * (0.005417(1 + 0.005417)^48) / ((1 + 0.005417)^48 - 1) = $432.87
New Monthly Payment = $20,000 * (0.00375(1 + 0.00375)^60) / ((1 + 0.00375)^60 - 1) = $356.24
Potential Savings = $432.87 - $356.24 = $76.63 per month
In this example, refinancing would save you $76.63 per month over the life of the loan.
Frequently Asked Questions
How accurate is this calculator?
This calculator provides an estimate based on the information you provide. For precise figures, consult with a financial advisor or lender.
What factors should I consider before refinancing?
Before refinancing, consider your credit score, the current market interest rates, your ability to make payments, and any fees associated with refinancing.
Can I refinance my auto loan if I have bad credit?
It may be more difficult to refinance with bad credit, but some lenders specialize in refinancing for subprime borrowers. You may need to pay higher interest rates or fees.
How long does the refinancing process take?
The refinancing process typically takes 30 to 45 days, depending on your lender and the complexity of your loan.