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Auto Loan Refinance Calculator
Calculate potential savings by refinancing your auto loan. Compare your current loan details with proposed refinancing options including loan amount, interest rate, term length, and monthly payments.
Refinance Calculator
Input your current loan information and your desired refinance terms to see estimated monthly payments and savings.
Financial Disclaimer: The information provided on this page is for educational and informational purposes only and does not constitute financial, legal, or tax advice. Auto loan refinancing involves fees, credit inquiries, and potential changes to your total interest paid. The calculations and examples shown are estimates based on simplified assumptions and may not reflect your actual financial situation. Interest rates, terms, and eligibility vary by lender, credit score, vehicle age, and market conditions. Always consult with a qualified financial advisor or licensed lending professional before making refinancing decisions. myUSFinance is not a lender and does not guarantee any rates, terms, or savings amounts.
Understanding Auto Loan Refinancing
What Is Auto Loan Refinancing?
Auto loan refinancing is the process of replacing your existing car loan with a new loan, typically from a different lender, that offers more favorable terms. When you refinance, the new lender pays off your current auto loan in full, and you begin making payments on the new loan under updated conditions. The primary goal is usually to secure a lower interest rate, reduce your monthly payment, change your loan term, or some combination of these benefits. Unlike buying a new car, refinancing keeps your current vehicle while restructuring only the financial obligation attached to it.
When Should You Refinance Your Auto Loan?
Knowing when to refinance can save you thousands of dollars over the life of your loan. Here are the most common scenarios where refinancing makes strong financial sense:
- Interest rates have dropped: If market rates have fallen since you originally financed your vehicle, you may qualify for a significantly lower rate. Even a reduction of 1-2 percentage points can translate to substantial savings over a 48- or 60-month loan term.
- Your credit score has improved: If your credit score has increased by 50 points or more since you took out your original loan, lenders will likely offer you better rates. Borrowers who initially financed through dealerships at above-market rates often benefit most from refinancing after improving their credit.
- You want to change your loan term: Shortening your term accelerates equity building and reduces total interest, while extending it lowers monthly payments. Both strategies serve different financial goals depending on your current cash flow needs.
- You are struggling with monthly payments: If your financial situation has changed and your current payment is difficult to manage, refinancing into a longer term can lower your monthly obligation and free up cash for other essential expenses.
- You financed through the dealership at a high rate: Dealer-arranged financing often carries a markup above what you could obtain directly from a bank or credit union. Refinancing within the first 6 to 12 months can capture savings you missed at the point of sale.
How Does Auto Loan Refinancing Work?
The refinancing process follows a straightforward sequence. First, you gather your current loan details including the remaining balance, interest rate, monthly payment, and remaining term. Next, you shop around and compare offers from banks, credit unions, and online lenders. Most lenders perform a hard credit inquiry, so it is wise to submit all applications within a 14-day window so they count as a single inquiry on your credit report. Once you accept an offer, the new lender pays off your existing loan directly, and you start making payments to the new lender under the agreed-upon terms. The entire process typically takes between 7 and 21 days from application to funding.
Break-Even Analysis: Is Refinancing Worth It?
Before refinancing, you must calculate your break-even point. This is the number of months it takes for your monthly savings to exceed the total fees associated with refinancing. Common fees include application fees, title transfer fees, lien recording fees, and sometimes prepayment penalties on your existing loan. To calculate your break-even point, divide your total refinancing costs by your monthly payment savings. If you plan to keep the vehicle beyond that break-even point, refinancing is financially advantageous. For example, if refinancing costs $300 and saves you $50 per month, your break-even point is 6 months. If you plan to keep the car for at least another two years, the net savings would be $900 after accounting for fees.
How to Refinance Your Auto Loan: Step-by-Step
- Review your current loan terms: Obtain your payoff amount, interest rate, remaining term, and any prepayment penalty details from your current lender. Your most recent loan statement or online account portal will have this information.
- Check your credit score: Review your credit report from all three bureaus (Equifax, Experian, TransUnion) for errors and understand your score range. A score of 660 or above typically qualifies for competitive refinance rates.
- Research current market rates: Compare auto refinance rates from at least 3 to 5 lenders including national banks, local credit unions, and online-only lenders. Credit unions frequently offer the most competitive rates for auto refinancing.
- Calculate your potential savings: Use the calculator above to model different scenarios. Input your current loan details and compare them against prospective refinance terms to see your monthly and total savings.
- Submit applications within a 14-day window: Apply to your top-choice lenders within a two-week period. Credit scoring models treat multiple auto loan inquiries in this timeframe as a single inquiry, protecting your credit score.
- Compare offers carefully: Look beyond the interest rate. Evaluate the total cost of the loan, including all fees, the new monthly payment, and the total interest you will pay over the full term.
- Accept the best offer and complete paperwork: Once you choose a lender, sign the loan agreement, provide required documentation (proof of income, insurance, vehicle title), and allow the new lender to pay off your existing loan.
- Continue payments on your old loan until payoff confirms: Do not stop paying your current lender until you receive written confirmation that the old loan has been paid in full and closed.
Auto Loan Refinance Savings Formula
The monthly payment on an auto loan is calculated using the standard amortization formula. Understanding this formula helps you estimate your refinance savings before applying:
Where:
M = Monthly payment
P = Principal (remaining loan balance)
r = Monthly interest rate (annual rate ÷ 12)
n = Number of monthly payments (loan term in months)
Worked Example
Suppose you have a remaining auto loan balance of $18,000 at 7.5% APR with 48 months remaining. You receive a refinance offer at 4.9% APR for 48 months with $250 in total fees.
P = $18,000 | r = 0.075 / 12 = 0.00625 | n = 48
M = 18,000 × [0.00625(1.00625)48] / [(1.00625)48 − 1]
M = 18,000 × [0.00625 × 1.3483] / [1.3483 − 1]
M = 18,000 × 0.008427 / 0.3483
M = $435.49 per month
Total paid = $435.49 × 48 = $20,903.52
Total interest = $20,903.52 − $18,000 = $2,903.52
Refinanced Loan:
P = $18,000 | r = 0.049 / 12 = 0.004083 | n = 48
M = 18,000 × [0.004083(1.004083)48] / [(1.004083)48 − 1]
M = 18,000 × [0.004083 × 1.2159] / [1.2159 − 1]
M = 18,000 × 0.004965 / 0.2159
M = $413.80 per month
Total paid = $413.80 × 48 = $19,862.40
Total interest = $19,862.40 − $18,000 = $1,862.40
Savings:
Monthly savings = $435.49 − $413.80 = $21.69/month
Total interest savings = $2,903.52 − $1,862.40 = $1,041.12
Net savings after $250 fees = $791.12
Break-even = $250 / $21.69 = ~11.5 months
Refinance Savings Comparison Table
The table below shows estimated total interest savings on an $18,000 auto loan over 48 months at various rate reductions, assuming no fees for simplicity:
| Original Rate | New Rate | Rate Reduction | Original Monthly | New Monthly | Monthly Savings | Total Interest Savings |
|---|---|---|---|---|---|---|
| 8.0% | 7.0% | 1.0% | $439.43 | $431.09 | $8.34 | $400 |
| 8.0% | 6.0% | 2.0% | $439.43 | $422.73 | $16.70 | $802 |
| 8.0% | 5.0% | 3.0% | $439.43 | $414.46 | $24.97 | $1,199 |
| 8.0% | 4.0% | 4.0% | $439.43 | $406.27 | $33.16 | $1,592 |
| 8.0% | 3.0% | 5.0% | $439.43 | $398.14 | $41.29 | $1,982 |
| 10.0% | 6.0% | 4.0% | $456.53 | $422.73 | $33.80 | $1,622 |
| 12.0% | 6.0% | 6.0% | $474.01 | $422.73 | $51.28 | $2,461 |
5 Expert Tips for Auto Loan Refinancing
Apply for refinancing after your credit score has improved but before your vehicle depreciates below the loan balance. Most lenders require a minimum vehicle value and maximum vehicle age (typically under 10 years or 100,000 miles). The sweet spot for refinancing is usually 6 to 24 months after your original purchase.
Some lenders charge a penalty for paying off your loan early. Before refinancing, review your current loan agreement for prepayment penalty clauses. Factor any penalty amount into your break-even calculation to ensure refinancing still makes financial sense after accounting for this additional cost.
Credit unions are member-owned, not-for-profit institutions that frequently offer auto refinance rates 1 to 2 percentage points lower than traditional banks. Many credit unions have easy membership requirements and streamlined online applications. They are often the best starting point for rate comparison shopping.
While a longer term lowers your monthly payment, it increases the total interest you pay over the life of the loan. If possible, refinance into the same or shorter term to maximize your interest savings. Only extend the term if you genuinely need lower payments to manage your budget responsibly.
Refinancing can take two to three weeks to finalize. Continue making your regular payments on your existing loan throughout this period. A missed or late payment during refinancing could damage your credit score, potentially jeopardizing your new loan terms or causing the lender to withdraw the offer entirely.
Scenario Comparison: Auto Loan Refinance Savings by Rate Reduction
Potential savings by refinancing a $20,000 auto loan with 48 months remaining.
| Current Rate | New Rate | Monthly Savings | Total Savings | New Payment |
|---|---|---|---|---|
| 8% | 5% | $31 | $1,488 | $461 |
| 10% | 6% | $43 | $2,064 | $470 |
| 12% | 6% | $64 | $3,072 | $470 |
| 14% | 7% | $73 | $3,504 | $479 |
| 18% | 8% | $101 | $4,848 | $488 |
Frequently Asked Questions About Auto Loan Refinancing
Most lenders allow you to refinance as soon as 60 to 90 days after your original purchase. Some lenders have no minimum waiting period at all. However, waiting at least two to three months gives your original loan time to be fully processed and reported to the credit bureaus, which can lead to smoother refinancing. If you received an above-market rate from a dealership, refinancing early can save you the most money over the loan's lifetime.
Refinancing typically causes a small, temporary dip in your credit score due to the hard inquiry from the lender. This usually amounts to 5 to 10 points and recovers within a few months. If you submit multiple applications within a 14-day window, credit scoring models treat them as a single inquiry. Over time, refinancing can actually help your score by reducing your debt-to-income ratio and demonstrating consistent payment history on the new loan.
Refinancing an underwater auto loan is more challenging but not impossible. Some lenders will refinance loans with a loan-to-value (LTV) ratio up to 125% or even 150% of the vehicle's value, though they may charge a higher interest rate. If you are significantly underwater, it may be better to make extra payments to reduce your balance before attempting to refinance, or to wait until the loan balance aligns more closely with the vehicle's depreciated value.
While requirements vary by lender, a credit score of 660 or higher generally qualifies you for competitive refinance rates. Borrowers with scores above 720 typically receive the best available rates. Some subprime lenders will consider scores as low as 500 to 580, but the rates offered may not provide meaningful savings compared to your current loan. Improving your score before applying, even by 20 to 40 points, can make a significant difference in the rates you are offered.
Fees vary by lender and state but may include a title transfer fee ($5 to $75 depending on your state), a lien recording fee ($5 to $40), and occasionally an application or origination fee. Some lenders charge no fees at all. Prepayment penalties on your existing loan, if applicable, should also be factored in. In total, refinancing fees typically range from $0 to $300. Always request a complete fee disclosure before accepting any refinance offer.
Shopping around with multiple lenders is recommended because it gives you leverage and ensures you get the most competitive rate. However, some current lenders offer loyalty discounts or streamlined refinancing with fewer documentation requirements. Get quotes from at least three to five different lenders, including your current one, and compare the total cost of each option. The best choice depends on the combination of interest rate, fees, customer service, and loan terms offered by each lender.
