Auto Refinance Calculator – Compare Loan Savings

An Auto Refinance Calculator is an online tool that can be used to calculate an estimate of the monthly payments you will pay, interest savings and overall costs involved with refinancing your current auto loan. If you currently have an auto loan and want to get a lower interest rate, change your repayment terms or reduce your monthly payments then this calculator can help.

When you refinance your auto loan you are essentially changing your current loan to a new loan. Usually this will come from a different lender. Refinancing could help you reduce the amount you are paying to borrow depending on your credit profile, loan balance, vehicle value and interest rates available.

You can use an Auto Refinance Calculator to estimate what you stand to save by entering your loan balance, interest rate, new repayment terms and any refinancing costs. You can see how much you are paying each month and compare this to what you would be paying with a new loan.

However, just because your monthly payments are reduced doesn’t mean you will save. If you extend your repayment period then you will be paying less per month but more overall in interest. This calculator can help you see what you stand to save.

How to Use the Auto Refinance Calculator

Enter the details below to see what you stand to gain from refinancing your current loan:

1. Current Loan Balance

Enter the loan balance you currently have.

2. Current Interest Rate

Enter the current interest rate you are being charged (per year).

3. Current Monthly Payment (if requested)

Enter the amount you are currently paying each month.

4. New Interest Rate

Enter the interest rate you are being offered by the lender.

5. New Loan Term

Select how long you want to repay the loan over.

6. Refinancing Costs

Add any application, title or other fees.

7. Calculate

See how much you would be paying each month, overall interest and how much you stand to save.

8. Compare

Compare how much you would be paying with your current loan versus refinancing.

For a more accurate figure use the payoff quote from your current lender. This will show any interest and other charges that may be due.

Auto Refinance Calculator Formula

An Auto Refinance Calculator will usually calculate the payments using the standard EMI calculation:

EMI = [P x r x (1 + r) n] / [(1 + r) n – 1]

Where,

EMI = New monthly payment

P = Amount being financed with the new loan

r = Monthly interest rate (as a decimal)

n = Number of payments to be made

To calculate the monthly interest rate divide the annual interest rate by 12 and then by 100.

For example, if the new interest rate was 6%, this would be:

r = 6 / (12 x 100) = 0.005

The amount being financed may include the payoff amount of your current loan plus any fees.

Overall repayment will be:

Total Repayment = EMI x n

Overall interest will be:

Total Interest = Total Repayment – P

To see how much you stand to save with refinancing subtract the remaining payments from your current loan by the new loan payments and fees:

Net Savings = Current Remaining Cost – New Loan Cost

Ensure you are comparing the same period in the future. Also ensure you are including any relevant fees. These calculations assume a fixed interest rate with monthly repayments and a standard amortising loan.

Example

You have an existing auto loan and want to refinance it to get a lower interest rate.

Current Loan Details New Loan Details

Loan Balance $20,000 $20,000

Annual Interest Rate 9% 6%

Remaining/New Term 48 months 48 months

Estimated Monthly Payment $497.71 $469.70

This means that you would be paying approximately $469.70 per month.

You can now compare:

Current Monthly Payment $497.71

New Monthly Payment $469.70

Difference in Monthly Payment $28.01

Current Remaining Cost $23,890.08

New Loan Cost $22,545.60

Potential Savings $1,344.48

This is just an example and figures are rounded. These calculations assume you have a fixed annual nominal interest rate, monthly payments, the same repayment period of 4 years and no extra fees.

If refinancing costs $300 and those fees are paid upfront, estimated net savings would be approximately $1,044.48.

This example shows how reducing your interest rate can reduce your monthly payments and the overall cost of borrowing. How much you save will depend on your payoff amount, lender and any fees.

Understanding Your Result

After using an Auto Refinance Calculator consider the following:

New Monthly Payment

This is an estimate of how much you would be paying with your new refinanced loan.

Difference in Monthly Payment

This shows how much more/less you would be paying each month.

Current Loan Remaining Cost

This is how much you would be paying if you continued with your current loan.

New Loan Cost

This includes any relevant fees for refinancing.

Potential Net Savings

This shows how much you stand to save.

Break Even Period

If there are any upfront fees for refinancing this will show you how long it could take to start saving.

Having a lower payment can help improve your monthly cashflow. However, you should consider if you will be paying more overall with the new loan.

What Affects the Outcome?

There are several factors that can affect the outcome:

Loan Balance

The amount needed to pay off your current loan.

Interest Rate

A lower interest rate can reduce the amount you pay in interest. This is especially true if your loan term remains the same.

New Loan Term

Extending your loan term can reduce your monthly payments however you will be paying more overall in interest.

Credit Score

Your credit history can affect the interest rate and refinancing options available.

Vehicle Age and Value

Some lenders may not allow you to refinance your loan based on the age, mileage and value of your vehicle.

Refinancing Fees

Application, title and other fees can reduce how much you save.

Prepayment Fees

Some loans may have a fee for paying your loan off early.

Loan to Value

The ratio of your loan balance to vehicle value may affect who will lend to you.

Interest Paid

You will not get your interest back if you refinance.

Benefits and Uses

Using an Auto Refinance Calculator can help you make a more informed decision with your current loan.

See if you can get a lower monthly payment.

Understand how a lower interest rate can affect your overall borrowing costs.

Compare short and long repayment terms.

Calculate how much you could save. See if the interest reduction outweighs the refinancing fees.

Improve your cashflow.

Compare the lender’s offers.

Understand if you want to save now but pay more in interest later.

Refinancing can be beneficial if your credit profile has improved or interest rates have dropped in the market.

Accuracy, Assumptions and Limitations

The Auto Refinance Calculator will give you an estimate based on the information you enter. Most basic calculators will assume you have a fixed interest rate, monthly payments and a standard amortising loan.

Your actual refinancing terms may differ due to fees, payoffs, taxes, credit, vehicle and prepayment fees. The lender may also offer a different interest rate and term.

The calculator may not take into consideration variable interest rates, balloon payments, late fees and all the costs incurred from moving the loan. If you extend your loan term with the new loan then you may be misled on how much you could save. Also if you don’t include all the remaining costs.

To ensure you get an accurate comparison, ask for an official payoff quote and written refinancing offer. Compare the overall remaining costs. Ensure you know what fees you are paying, repayment terms and loan conditions.

FAQs

1. What is an Auto Refinance Calculator?

An Auto Refinance Calculator is an online tool that can be used to calculate an estimate of your new monthly payment, overall interest costs and potential savings. It compares your current auto loan to a new loan.

2. When should I refinance my auto loan?

You may want to consider refinancing if you can qualify for a lower interest rate, want to change your monthly payments or need to change your repayment terms. Compare the overall costs of both loans.

3. Will refinancing my car loan reduce my monthly payments?

Refinancing may reduce your monthly payments. This can be achieved by having a lower interest rate or extending your repayment terms. However, extending your term may mean you pay more in interest.

4. Does refinancing an auto loan save me money?

Refinancing can save you money if the interest reduction outweighs the refinancing fees and other costs. Calculate how much you would be paying with your current loan and compare it to the full cost of the new loan.

5. Can I refinance a car loan with bad credit?

Some lenders do offer refinancing options for those with not perfect credit scores. However, your eligibility and interest rate will vary. Improving your credit profile and comparing lenders can help you get better terms.

6. Are there any fees to refinance an auto loan?

Depending on your lender and location there may be application, title, registration and prepayment fees. Ensure you include any relevant fees when calculating how much you could save.

7. Is the Auto Refinance Calculator accurate?

No. It is an estimate based on the information you enter. Your actual payments and savings may differ depending on the lender, payoff, fees and your eligibility. Ask for a written refinancing offer.