How it Works

Refinancing an auto loan is essentially getting a new loan with new terms. A lower interest rate or longer term can potentially lower your monthly payment, though you may pay more overall. Enter the terms of your current loan and the terms of a potential refinanced loan to compare a monthly payment as well as overall costs.

What is an auto refinance calculator and how does it work?

An auto refinance calculator, also sometimes called a car refinance calculator or car loan refinance calculator, is a tool that helps you estimate your potential new monthly payment and the overall cost savings (or gulp price increase) of refinancing your current car loan.

This calculator works by taking information about your existing loan (your outstanding balance, current interest rate, and remaining months on the loan) and compares that against the terms of your new loan. Using a loan refinance calculator auto allows you to quickly see how different interest rates and loan terms could impact your monthly payments and the total amount of interest you pay over the life of the loan.

What information do I need to use an auto loan refinance payment calculator?

To use an auto loan refinance payment calculator, this is what you’ll need:

• The current outstanding loan balance
• Your current annual percentage rate (APR)
• Number of months remaining on your current loan term

For the new loan you’re considering, you’ll need to know:

• New annual percentage rate (APR)
• New loan term (in months).

Having all this ready to go makes sure that you get reliable results from our auto loan refinance payment calculator.

When should I refinance my car loan?

Even a small reduction in your rate can lead to big savings when refinancing. Average auto refinance rates can range from around 4% to over 11% depending on your FICO® Score and the age of the vehicle.

Generally speaking, if you can lock in auto refinance rates that are at least 0.5% to 1% below your existing rate, we’d recommend using our auto refinance calculator to see how much you can save.

Should I extend the life of my loan when I refinance my car?

While extending the life of your loan when you refinance your car can lower your monthly payments, it will likely end up costing you more in the end. You can use our car payment refinance calculator to show you how much your monthly payment would decrease with a longer loan term. Just remember that while your monthly payments may be lower, extending the loan term typically means you will pay more interest over the entire life of the loan.

How much should I pay for my car loan?

We recommend using the 50/30/20 rule to decide how much you should be paying every month for your car. The 50/30/20 breaks down your after-tax budget into three categories:

• 50% for needs
• 30% for wants
• 20% for savings and paying off debt

Your car payment falls into the “needs” category, so make sure that 50% of your after-tax income can cover your car payment, along with the other needs like groceries, gas, and utilities.

If you want to figure out your car loan budget following the 50/30/20 rule, we’ve got a calculator for that too!