Auto Loan Refinance Savings Calculator
How the Calculator Works
Refinancing replaces your existing auto loan with a new one at a different rate and term. This tool first computes the payment and remaining interest on your current loan, then compares it with the new option after adding any refinance fees to the balance. The standard amortization formula for a fixed payment given principal , monthly rate , and total payments is:
We compute the current payment with this expression, then repeat using the proposed refinance rate and term (or the remaining months if you leave the field blank). The total interest is found by multiplying the payment by the number of months and subtracting the balance. Fees are added to the new loan balance to prevent overstating savings.
Example Scenarios
The following table compares how different combinations of rates and terms affect monthly savings and break-even points. Use these examples as a reference while experimenting with your own numbers.
| Current loan | Refinance offer | Monthly savings | Total interest saved | Break-even (months) |
|---|---|---|---|---|
| $18,000 @ 8% with 36 months left | 5.5% for 36 months, $300 fees | $38 | $1,008 | 8 |
| $12,500 @ 6.9% with 30 months left | 5.2% for 30 months, $0 fees | $22 | $522 | Immediate |
| $22,000 @ 9% with 48 months left | 4.9% for 60 months, $450 fees | $76 | $1,420 | 7 |
Interpreting the Results
A positive monthly savings number means the refinance payment is lower than your current payment. Total interest saved compares the remaining interest on the existing loan to the interest and fees on the new one. If the calculation shows a break-even period, it indicates how many months you must keep the new loan before the cumulative savings exceed your upfront costs. When refinancing to a longer term, watch how the total interest may increase even if the payment drops—this can still be useful for cash flow but may cost more overall.
Planning Tips
Check for prepayment penalties or unpaid add-ons in your current loan before refinancing. Improving your credit score, reducing debt, or adding a cosigner can unlock lower rates. If you plan to sell the car soon, make sure the break-even period is shorter than the time you will keep the vehicle. A refinance can also be combined with extra payments: once the new loan closes, making additional principal payments reduces interest even further.
Continue your car financing research with the advanced auto loan calculator, auto lease buyout, and car ownership cost calculators to compare refinancing against alternative strategies.