Will an auto refinance save money?
Enter what you owe, your current rate and months left, and the new loan’s rate and length. See the new payment and whether refinancing saves money overall.
- Your new monthly payment
- $587.13
Refinancing $25,000.00 at 6% over 48 months makes your payment $587.13 (now $622.13), a total saving of $1,680.02.
- Your current monthly payment
- $622.13
- Monthly saving
- $35.00
- Interest if you keep your loan
- $4,862.05
- Interest on the new loan
- $3,182.03
- Total cost if you keep your loan
- $29,862.05
- Total cost if you refinance
- $28,182.03
- Total saving
- $1,680.02
- Months
- 48
Your new monthly payment: $587.13. Refinancing $25,000.00 at 6% over 48 months makes your payment $587.13 (now $622.13), a total saving of $1,680.02.
How fast does each loan shrink?
What does each year look like?
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Compares your current car loan with a refinanced loan: the new monthly payment, the interest on each, the total saving after fees, and the break-even month.
Example with the default inputs (Loan balance today $25,000.00, Current APR 9%, Months left on your loan 48, New APR 6%, New loan length (months) 48, Refinance fees $0.00, Add the fees to the new loan No): Refinancing $25,000.00 at 6% over 48 months makes your payment $587.13 (now $622.13), a total saving of $1,680.02.
Method: payment = L × r ÷ (1 − (1 + r)^−n) for each loan, with r = APR ÷ 12; each month interest = balance × r; saving = every payment left on the current loan − (every new payment + fees paid up front).
- Your current loan is on schedule: its payment is the level payment that clears today’s balance in the months left.
- Both loans have fixed rates, monthly payments at the end of each month, and interest at APR ÷ 12.
- The last payment of each loan clears whatever is left.
- Fees are either paid up front or added to the new loan balance.
- This is an estimate, not financial advice. Check the lender’s disclosures for the actual APR and fees.
Worked examples
Each example is checked against the calculator on every build.
- Loan balance today $20,000.00, Current APR 4.75%, Months left on your loan 72, New APR 4.75%, New loan length (months) 36 gives Your current monthly payment $319.78, Interest if you keep your loan $3,024.48, Your new monthly payment $597.18, Interest on the new loan $1,498.32.Source: CFPB, How do I compare auto loan offers? ($20,000 at 4.75%: $320 and $3,024 over six years, $597 and $1,498 over three years); full values by hand in content.mdx
- Loan balance today $15,000.00, Current APR 12%, Months left on your loan 36, New APR 6%, New loan length (months) 36, Refinance fees $300.00, Add the fees to the new loan no gives Your current monthly payment $498.21, Your new monthly payment $456.33, Monthly saving $41.89, Fees paid back after 8.Source: hand calculation in content.mdx: 300 ÷ 41.89 = 7.2, rounded up to 8 months
- Loan balance today $10,000.00, Current APR 0%, Months left on your loan 20, New APR 0%, New loan length (months) 40, Refinance fees $200.00, Add the fees to the new loan yes gives Your current monthly payment $500.00, Your new monthly payment $255.00, Total cost if you keep your loan $10,000.00, Total cost if you refinance $10,200.00, Total saving -$200.00.Source: hand calculation in content.mdx: 0% loans divide evenly; the $200 fee is borrowed
How the two loans are worked out
Both loans use the level-payment formula, with the APR ÷ 12 as the monthly rate r (as a decimal):
payment = L × r ÷ (1 − (1 + r)^−n)
or L ÷ n when the APR is 0.
- Current loan: L is what you owe today and n the months left. This assumes your loan is on schedule.
- New loan: L is what you owe today, plus the fees if you add them to the loan, and n is the new loan’s length.
Month by month, for each loan: interest = balance × r, and the rest of the payment lowers the balance. The last payment clears whatever is left. Values are not rounded to the cent between months.
The results:
- Monthly saving = current payment − new payment.
- Interest if you keep your loan and interest on the new loan add up each loan’s interest.
- Total cost if you keep your loan adds every payment left. Total cost if you refinance adds every new payment, plus the fees if you pay them up front.
- Total saving = total cost if you keep your loan − total cost if you refinance. Below zero, refinancing costs more.
- Fees paid back after = fees ÷ monthly saving, rounded up to whole months. It is shown only when you pay fees up front, the monthly saving is above zero, and fees ÷ monthly saving is no more than the new loan’s length in months; otherwise the fees are not paid back by the lower payments.
Assumptions
- Both loans have fixed rates and monthly payments at the end of each month.
- This is an estimate, not financial advice. The lender’s disclosures give the real APR and fees.
Worked examples by hand
The CFPB’s $20,000 at 4.75%: 72 months left, refinanced into 36 months at the same rate. r = 0.0475 ÷ 12 = 0.0039583.
- Current: 1.0039583^−72 = 0.752437, so the payment is 20,000 × 0.0039583 ÷ 0.247563 = $319.78 (the CFPB’s $320). 72 payments total $23,024.48, so the interest is $3,024.48.
- New: 1.0039583^−36 = 0.867432, so the payment is 20,000 × 0.0039583 ÷ 0.132568 = $597.18 (the CFPB’s $597). 36 payments total $21,498.32, so the interest is $1,498.32.
The payment goes up by $277.39 a month, but the total saving is 3,024.48 − 1,498.32 = $1,526.16.
$15,000 at 12% with 36 months left, into 6% over 36 months, $300 of fees paid up front. Current: r = 0.01, 1.01^−36 = 0.698925, payment = 15,000 × 0.01 ÷ 0.301075 = $498.21. New: r = 0.005, 1.005^−36 = 0.835645, payment = 15,000 × 0.005 ÷ 0.164355 = $456.33. The monthly saving is $41.89, and 300 ÷ 41.89 = 7.16, so the fees are paid back after 8 months.
$10,000 at 0% with 20 months left, into 0% over 40 months, a $200 fee added to the loan. Current: 10,000 ÷ 20 = $500. New: (10,000 + 200) ÷ 40 = $255. The totals are $10,000 and $10,200, so refinancing costs $200 more (a saving of −$200), even though the payment is lower.
Other questions people ask
When does refinancing a car loan save money?
When the new loan costs less in total: every payment left on your current loan, compared with every payment on the new loan plus any fees. A lower rate usually helps. A longer loan lowers the monthly payment but can cost more in total, because you pay interest for more months.
Why can a lower payment cost more overall?
Stretching the loan over more months lowers each payment but adds months of interest. The CFPB’s example: $20,000 at 4.75% costs $1,498 in interest over three years, but $3,024 over six years, more than twice as much.
What fees should I include?
Include anything you pay to refinance: a lender or origination fee, title and registration transfer fees, and any prepayment penalty on your current loan. Check your current loan agreement for a prepayment penalty, and the new lender’s disclosures for the APR and fees.
What is the break-even point?
If you pay fees up front, it is how many months of lower payments it takes to earn them back: fees ÷ monthly saving, rounded up. With $300 of fees and a $41.89 monthly saving, that is 8 months. If you sell the car or pay the loan off before then, the refinance cost more than it saved.
How is my current payment worked out?
From what you owe, your current APR, and the months left: it is the level payment that clears the balance on time. If you have been paying extra, your real payment may be different, and so may the months left.
Does refinancing affect my credit?
Applying for a new loan usually means a credit check, and opening the new loan changes your credit history. Rate shopping for the same kind of loan within a short period is often treated as a single inquiry. The calculator does not include credit effects.