Car Refinance Calculator

Refinancing pays off when the monthly savings repay the closing costs soon enough, and when the new loan's total interest is actually lower. Example: a $28,000 balance at 9.5% APR with 48 months left, refinanced at 5.9% for 48 months with $400 in closing costs, drops the payment by $47.15 a month, breaks even in month 9, and saves $1,863.17 overall. Stretch the new loan to 72 months instead and the payment falls much further, yet the refinance loses money. Both worked examples are below.

What each input means

Current balance is what you still owe on the loan today, not what you originally borrowed. Current APR is the rate on that loan. Months left is the number of payments still to go. Current monthly payment is optional: leave it blank and it is calculated from the balance, APR and months left; enter it if your real payment differs, for example because you pay extra each month. New APR and new loan term describe the refinance offer. Closing costs are the lender and title fees charged to open the new loan. This calculator treats closing costs as paid in cash at closing, not rolled into the new loan.

How the breakeven is calculated

Each payment comes from the standard amortization formula: payment = P × r(1+r)^n ÷ ((1+r)^n − 1), with P = the balance refinanced, r = APR ÷ 12, n = months. The new loan pays off the current balance, so P is the same on both sides.

Monthly savings = current payment − new payment. Breakeven month = closing costs ÷ monthly savings, rounded up: the first month in which the savings have repaid the costs. If the new payment is not lower, there is no breakeven month, whatever the rate brochure says.

Net savings over a window compares the two paths over the same number of months, fairly: for each path it adds the payments made inside the window plus the balance still owed at the end of it, and the new path also carries the closing costs. Counting the leftover balance matters. Without it, a long new loan looks cheap inside a short window simply because most of its cost sits outside it.

Worked example 1: a straight rate drop

A $28,000 balance at 9.5% APR with 48 months left, refinanced at 5.9% for 48 months, with $400 in closing costs paid in cash:

Verdict: worth doing if you will keep the loan past month 9, which most people in this position will.

Worked example 2: the longer-term trap

The same $28,000 balance and the same $400 in closing costs, but the offer is 7.5% for 72 months. The rate is lower than 9.5% and the payment falls hard. It still loses:

Verdict: the breakeven month alone would wave this through in month 2. The total interest line gives the real answer: stretching the term adds $1,091.51 of interest, more than the rate cut saves. A lower payment is not the same thing as a cheaper loan.

What changes the answer most

The new term. Extending the term is the easiest way to make a refinance look good month to month while making it worse overall, as worked example 2 shows. How long you will actually keep the loan. A breakeven in month 9 only pays if the loan is still alive in month 9; selling the car or paying it off before then hands the closing costs to the lender for nothing. The rate gap. On the same term, each point of APR on $28,000 over 48 months is worth roughly $13 a month.

FAQ

Does the breakeven month tell me whether to refinance?
Only half of it. Breakeven says when the monthly savings have repaid the closing costs. It says nothing about total interest, which is where a longer term quietly takes the money back. Check the net savings lines as well.

What if the lender rolls the closing costs into the new loan?
Then the balance refinanced is higher than the current balance, and you pay interest on the fees for the life of the loan. This calculator assumes costs paid in cash. To approximate a rolled-in offer, add the costs to the current balance before entering it, and set closing costs to 0.

When does refinancing never pay?
When the new payment is not lower (this calculator shows no breakeven month), when the breakeven month falls after you plan to sell the car or pay the loan off, and when a longer term makes the total interest higher even though the payment drops.

Why does the net savings figure count a balance I have not paid yet?
Because it is a real cost, just a later one. Comparing payments only, over a fixed window, lets a longer loan hide its remaining balance outside the window. Counting payments plus the balance still owed compares the same debt over the same months.