Refinance Calculator Auto Loans
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Reviewed by Calculator Editorial Team
Use this refinance calculator auto loans to estimate potential savings when refinancing your auto loan. Compare different interest rates and loan terms to make an informed decision about whether refinancing is right for you.
How to Use This Calculator
Enter your current auto loan details and the proposed refinanced loan terms to calculate potential savings. The calculator will show you:
- Monthly payment comparison
- Total interest paid over the loan term
- Potential savings from refinancing
- A breakdown of how much you'll pay each month
Use the results to decide whether refinancing your auto loan makes financial sense for your situation.
How Auto Loan Refinancing Works
Refinancing your auto loan means replacing your current loan with a new one, typically with better terms. This can help you save money on interest payments if interest rates have dropped since you originally took out the loan.
The process involves:
- Applying for a new loan with a lender
- Getting approved for the new loan terms
- Paying off your old loan with the new one
- Starting to make payments on the new loan
There are several types of auto refinancing options available:
| Refinance Type | Description | Best For |
|---|---|---|
| Cash-Out Refinance | Takes out more money than the original loan balance | Home improvements, debt consolidation, or other expenses |
| Rate-and-Term Refinance | Changes interest rate and/or loan term | Lowering monthly payments or saving on interest |
| Debt Consolidation | Combines multiple loans into one | Simplifying debt management |
The Formula
The calculator uses the standard auto loan payment formula to calculate monthly payments:
Monthly Payment Formula
M = P [i(1 + i)^n] / [(1 + i)^n - 1]
Where:
- M = Monthly payment
- P = Principal loan amount
- i = Monthly interest rate (annual rate divided by 12)
- n = Number of payments (loan term in years × 12)
The calculator then compares the current loan payments with the proposed refinanced loan payments to determine potential savings.
Worked Example
Let's look at an example to see how the calculator works:
Example Scenario
Current Loan: $20,000 at 5.5% APR for 5 years
Proposed Refinanced Loan: $20,000 at 3.5% APR for 5 years
Using the calculator:
- Enter $20,000 for both current and refinanced principal
- Set current APR to 5.5% and refinanced APR to 3.5%
- Set loan term to 5 years for both
- Click "Calculate"
The calculator will show that your monthly payment would decrease from approximately $370 to $320, saving you about $560 in interest over the life of the loan.
Frequently Asked Questions
How much can I save by refinancing my auto loan?
The amount you can save depends on the difference in interest rates between your current loan and the refinanced loan. Use our calculator to compare different scenarios and see potential savings.
Is refinancing my auto loan worth it?
Refinancing may be worth it if you can secure a lower interest rate, which will reduce your monthly payments and save you money in the long run. However, there may be fees associated with refinancing, so it's important to compare the costs and benefits.
How long does it take to refinance an auto loan?
The refinancing process typically takes 30 to 60 days, depending on your lender and the complexity of your situation. Some lenders offer expedited processing for an additional fee.
What credit score do I need to refinance an auto loan?
Most lenders require a good credit score of at least 620 to refinance an auto loan. Some lenders may accept scores as low as 580, but you may need to pay higher interest rates or fees.