Refinancing a car loan means replacing your current loan with a new one, ideally at a lower interest rate. People do it when their credit has improved, when market rates have dropped, or when they took the dealer's financing without shopping around. A lower payment sounds like an easy win, but a refinance also costs fees and often restarts the clock. This car refinance calculator compares your current loan with a new offer and shows the monthly change, the interest on each loan, and how long it takes to earn back the fees.
How to use the car refinance calculator
- Enter your current balance, the APR on your existing loan and the number of months left on it.
- Enter the new offer: its APR and its term in months, counted from the day the new loan starts.
- Enter any fees you would pay out of pocket, such as a title transfer, lien or application fee. Use 0 if there are none.
The calculator works out your current payment from your balance, rate and remaining months, so you do not need to look it up. The comparison assumes you borrow the same balance on the new loan.
Refinance formula
Remaining interest = P × n − B (for each loan)
Net savings = current interest − new interest − fees
Break-even months = fees ÷ (current payment − new payment)
The break-even point only makes sense when the new payment is lower. If you refinance to a longer term at a similar rate, the payment falls but the total interest rises, so the net savings can be negative even though your monthly bill is smaller.
Worked example
You owe $20,000 at 9% APR with 48 months left. A lender offers 5% for 48 months and charges $200 in fees.
- Current payment: $497.70. Interest still to pay: $3,889.64.
- New payment: $460.59. Interest on the new loan: $2,108.12.
- Monthly saving: $37.11.
- Net savings over the loan = $3,889.64 − $2,108.12 − $200 = $1,581.52.
- The $200 fee is earned back in 6 months.
How the new rate changes the result
Same $20,000 balance at 9% with 48 months left, refinanced for 48 months with $200 in fees:
| New APR | New payment | Monthly saving | Interest on new loan | Net savings |
|---|---|---|---|---|
| 3% | $442.69 | $55.01 | $1,248.95 | $2,440.69 |
| 4% | $451.58 | $46.12 | $1,675.89 | $2,013.75 |
| 5% | $460.59 | $37.11 | $2,108.12 | $1,581.52 |
| 6% | $469.70 | $28.00 | $2,545.63 | $1,144.01 |
| 7% | $478.92 | $18.78 | $2,988.39 | $701.25 |
How the new term changes the result
Same loan refinanced to 5% with different terms. A longer term cuts the payment but gives back much of the saving:
| New term (months) | New payment | Interest on new loan | Net savings |
|---|---|---|---|
| 24 | $877.43 | $1,058.27 | $2,631.37 |
| 36 | $599.42 | $1,579.05 | $2,110.59 |
| 48 | $460.59 | $2,108.12 | $1,581.52 |
| 60 | $377.42 | $2,645.48 | $1,044.16 |
| 72 | $322.10 | $3,191.10 | $498.54 |
When refinancing makes sense
- The rate drop is meaningful and the break-even comes well before the loan would end.
- You keep the term the same or shorter, so the lower rate is not offset by extra months of interest.
- You are not deeply underwater. Many lenders limit how much they will lend compared with the car's value, and an older, high-mileage car may not qualify.
If you would rather keep the loan and shorten it, the car loan payoff calculator shows what extra payments achieve. To model a brand-new loan, use the car payment calculator or the auto loan calculator.
Frequently asked questions
When should I refinance my car loan?
When the new rate is clearly lower, the term is not longer than what you have left, and the fees are earned back well before the loan would end. The break-even output shows the number of months.
Does refinancing a car hurt my credit?
A lender usually makes a hard credit inquiry, which can lower your score slightly for a short time. The new account also replaces an older one. Compare offers within a short window to limit the effect.
Why is my net saving negative with a lower payment?
A longer term means more months of interest. If the extra months cost more than the rate cut saves, you pay more overall even though each payment is smaller.
What fees can a refinance include?
Common ones are a title or lien transfer fee, a state registration fee and sometimes an application fee. Ask the lender for the full list in writing and enter the total.
Does the calculator assume I roll fees into the loan?
No. It treats fees as paid up front and borrows the same balance on the new loan. If you finance the fees, add them to the balance and enter 0 for fees.