Car Refinance Calculator

What refinancing changes

An auto refinance replaces the current loan with a new one. The new lender pays the old payoff amount, and you repay the new principal under a new rate and term. The car, its depreciation and its market value do not change because the loan changed.

The calculator models two choices from today:

When costs are financed, they are added to the new principal instead. That increases both the payment and the interest charged on those costs.

Payment formula

For principal P, monthly rate r and n remaining payments, the estimated fixed payment is:

payment = P × r ÷ (1 − (1 + r)^−n)

At a 0% rate, the payment is simply P ÷ n. Calculations use unrounded values internally and round money only for display.

Economic break-even

This calculator does not use the shortcut fees ÷ monthly savings as its main break-even. That shortcut can be misleading when fees are financed or the new term is longer.

Instead, each month it compares:

1. payments made under each option; and
2. the balance that would still have to be paid off at that month.

The economic break-even is the first whole month when the refinance option has cost no more than keeping the existing loan. Some offers never reach that point within either loan term.

Lower payment, higher cost

Suppose a borrower has 30 months left and refinances into a fresh 60-month loan. Even with a lower rate, spreading the balance over twice as many payments can create a much smaller monthly bill and a larger total cost. Payment relief can be useful, but it should be described honestly as cash-flow relief, not automatic savings.

What to include in refinance costs

Include every cost that exists only because the loan is being replaced:

• lender application or origination charges;
• title, registration or lien-recording charges;
• a prepayment or payoff penalty in the old contract; and
• other mandatory charges shown in the refinance disclosure.

Do not enter the same cost twice. If a charge is added to the new balance, choose the financed option. If it is paid from cash, choose upfront. If an offer mixes financed and upfront charges, run the two structures separately or combine the charges only after confirming which treatment you want to model.

Rate, APR and payoff amount

The contractual interest rate drives the exact scheduled payment. APR can include certain fees and is valuable for comparing disclosures, but entering APR as though it were the note rate produces an estimate rather than an exact lender payment.

A payoff quote is also more useful than the original loan amount or a casually copied statement balance. Many vehicle loans accrue interest daily, so the amount needed to settle the account can change with the payoff date.

Compare offers safely

First compare the new offer using a term close to the months remaining on the current loan. That isolates much of the rate effect. Then test a shorter or longer term deliberately and watch both the payment and total-cost result.

Real approval and pricing can depend on credit, income, vehicle age and mileage, loan-to-value, lender minimums and local rules. If the payoff exceeds the vehicle value, some lenders may restrict the amount they will refinance.

This calculator is an educational fixed-rate amortization estimate. It is not a lender offer, approval prediction or financial recommendation.

Sources and further reading

• Consumer Financial Protection Bureau: Auto loan guide
• Consumer Financial Protection Bureau: Prepayment penalties