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Auto Refinance Calculator

Dec 13, 2023

Refinancing your car loan can lower your interest rate and save hundreds or even thousands over the life of your loan. This is especially true if you originally signed with a dealership, or your credit score has improved since taking out your auto loan. No matter the circumstance, it is worth your while to calculate savings and compare auto refinancing rates.

Use the auto loan refinance calculator to find potential savings

Bankrate’s auto refinance calculator can help you determine how much you could save on interest, monthly payments or both. 

  1. Input details. Simply enter the details of your current loan: your monthly payment, remaining balance, interest rate and the remaining loan term.
  2. Compare rates. After figuring out what adjusted term and interest rate work best for you and your wallet, compare lenders that offer auto refinance.
  3. Apply for preapproval. Get preapproved with multiple lenders to see potential rates — and determine if they meet your needs. This way, you can calculate if refinancing will really save you money compared to your current loan.

What refinancing is and how it works

Refinancing allows you to replace your current loan with a new one. If you can qualify for lower rates and opt for a shorter — or equivalent — term, you may reduce your monthly payment and the total amount of interest you pay. 

While many can qualify for better rates through refinancing, it’s not always the case. Lenders may require you to meet specific requirements to refinance, including: 

  • A history of on-time payments.
  • A good personal credit score.
  • Less than 100,000 miles on vehicle.
  • Vehicle less than 10 years old.
  • Current loan meets the minimum refinance amount.

The choice to refinance does not come without risk, however. If you choose to refinance at a similar rate but opt for a longer term, you are more likely to become upside-down. To avoid this, stay away from long repayment terms — which can feel enticing when refinancing for a smaller monthly payment. 

When should you refinance an auto loan?

Wondering when you should refinance your current auto loan? If you're in one of these situations, the answer might be now.

  • You received dealer financing. Dealers often add a few points as a commission. If your original loan was financed by your car dealer’s preferred lenders, there is a good chance you didn’t score the best rate possible. 
  • Your credit score improved. A difference of just 30 points on your credit score can make a significant impact on your rate. If your score has improved since your original auto loan, you may save money by refinancing. 
  • You want to lower your payment. Refinancing for a longer loan term can reduce your monthly payment. However, it will increase the amount of interest you pay. Ideally, you should lower your payment by sticking with a term similar to the time you have left at a lower interest rate.
  • National interest rates are low. When the federal funds rate is low, auto loan rates will also be more competitive. This is unfortunately not the case right now as the Federal Reserve has increased rates at 11 meetings since the beginning of 2022, meaning a higher cost for lenders to borrow. However, the Fed has passed on raising rates for three straight meetings, and observers expect rate decreases in 2024.
  • You have equity in your car. Lenders see positive equity, when your vehicle is worth more than you owe, as a plus. If you fall into this category you might get offered lower rates. 

How to apply for an auto refinance loan

The process of refinancing your auto loan is similar to applying for your initial vehicle loan. Follow these five steps before signing off on a new refinanced auto loan.

  1. Decide if refinancing is best for you financially. Compare your current monthly cost with potential savings from the refinancing process.
  2. Review your current loan. Understand your current rate and loan term to determine how much you will pay in interest.
  3. Check your credit score. The better your credit score, the more competitive your rate will likely be. Take the time to improve your score before applying.
  4. Determine the value of your car. Use tools like Kelley Blue Book and Edmunds to find out how much your car is worth
  5. Estimate your savings. To find which loan is right for your needs, consider how updated loan terms will play into your expected monthly cost and whether a prepayment penalty will negate your savings.
  6. Get your paperwork in order. Once you decide on the right loan for your needs, it’s smart to organize the necessary documents. These include things like proof of income, insurance and vehicle details. 

Next steps

The key to finding the best auto loan is spending within your means. For many drivers, refinancing is a great way to adjust your current loan to better fit your monthly budget. Take advantage of the calculator to understand what a new loan would look like for you and your wallet and compare at least three different lenders.