Refinance Calculator for Auto Loans
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Reviewed by Calculator Editorial Team
Use this refinance calculator for auto loans to determine whether refinancing your current auto loan is worth it. Compare your current loan terms with potential refinanced terms to see if you can save money by switching lenders or loan types.
How to Use This Calculator
To use this refinance calculator for auto loans:
- Enter your current auto loan details: original loan amount, current interest rate, remaining loan term, and monthly payment.
- Enter the potential refinanced loan details: new loan amount, new interest rate, new loan term, and any fees associated with refinancing.
- Click the "Calculate" button to see your potential savings and compare the two loan options.
- Review the results to determine whether refinancing is worth it for your situation.
The calculator will show you the total interest paid, total payments, and net savings for both your current loan and the refinanced option.
Formula Used
The refinance calculator uses the following formulas to calculate loan payments and compare the two options:
Monthly Payment Formula
The monthly payment for a loan is calculated using the 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 months)
Total Interest Paid
The total interest paid on a loan is calculated by:
Total Interest = (Monthly Payment × Number of Payments) - Principal Loan Amount
Net Savings
Net savings from refinancing is calculated by:
Net Savings = (Total Interest Current Loan - Total Interest Refinanced Loan) - Refinancing Fees
The calculator applies these formulas to both your current loan and the potential refinanced loan to provide a clear comparison.
Worked Example
Let's look at an example to see how the refinance calculator works. Suppose you have a current auto loan with these details:
| Current Loan Details | |
|---|---|
| Original Loan Amount | $25,000 |
| Current Interest Rate | 8.5% |
| Remaining Loan Term | 48 months |
| Monthly Payment | $550.00 |
You're considering refinancing with these new terms:
| Refinanced Loan Details | |
|---|---|
| New Loan Amount | $25,000 |
| New Interest Rate | 5.5% |
| New Loan Term | 60 months |
| Refinancing Fees | $300 |
Using the calculator, we can compare these two options:
| Comparison | Current Loan | Refinanced Loan |
|---|---|---|
| Monthly Payment | $550.00 | $450.00 |
| Total Interest Paid | $1,680.00 | $1,200.00 |
| Total Payments | $26,680.00 | $27,000.00 |
| Net Savings | - | $180.00 |
In this example, refinancing saves you $180 over the life of the loan, even though you're paying more in total because the lower interest rate more than offsets the refinancing fees.
When to Refinance Your Auto Loan
Refinancing your auto loan can be a good idea in several situations:
Lower Interest Rates
If you can secure a lower interest rate than your current loan, refinancing can save you hundreds or thousands of dollars over the life of the loan.
Shorter Loan Term
If you can get a shorter loan term with a lower interest rate, you'll pay less in total interest and may qualify for a lower monthly payment.
Change in Financial Situation
If your financial situation has improved (better credit score, higher income, or lower debt-to-income ratio), you may qualify for better loan terms.
Switching Loan Types
You might consider refinancing if you want to switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage or vice versa.
Before refinancing, consider the costs and benefits carefully. Refinancing fees, closing costs, and potential changes in interest rates should all be factored into your decision.
When Not to Refinance
There are also situations where refinancing may not be worth it:
- If your current interest rate is already very low
- If refinancing fees exceed potential savings
- If you're close to paying off your current loan
- If you don't have good credit or income to qualify for better terms
Frequently Asked Questions
- How much can I save by refinancing my auto loan?
- Potential savings depend on your current interest rate, the new rate you qualify for, the loan term, and any refinancing fees. Use our calculator to estimate your specific savings.
- What are the costs of refinancing an auto loan?
- Common refinancing costs include origination fees, appraisal fees, credit report fees, and closing costs. These can range from $1,000 to $3,000 depending on the lender and loan type.
- How long does it take to refinance an auto loan?
- The refinancing process typically takes 30 to 45 days, though some lenders may process applications faster. The exact time depends on your lender and whether you need an appraisal.
- Can I refinance an auto loan with bad credit?
- It's more difficult to refinance with bad credit, but some lenders specialize in loans for borrowers with less-than-perfect credit. You may need to pay higher interest rates or fees.
- Will refinancing hurt my credit score?
- Refinancing can temporarily lower your credit score as a hard inquiry is made. However, if you qualify for better loan terms, the long-term benefits may outweigh this short-term impact.