Car Loan Refinance Calculator and Payment Estimate

This car loan refinance calculator estimates a new monthly payment and total interest from the amount refinanced, annual percentage rate (APR), and loan term. Enter the proposed loan’s principal, APR, and term to see the estimated payment and interest over the full term.

Formula

The calculator assumes equal monthly payments on a fixed-rate loan. It first converts the annual APR to a monthly rate and the term in years to a number of monthly payments:

• Monthly rate: r = APR ÷ 1,200, expressed as a decimal.
• Number of payments: n = years × 12.
• Monthly payment: payment = round[P × r ÷ (1 − (1 + r)⁻ⁿ), 2].
• Total interest estimate: interest = rounded monthly payment × n − P.

P is the refinanced loan amount in dollars, APR is the annual percentage rate entered as a percent, r is the monthly rate, and n is the number of monthly payments. The payment is rounded to cents before total interest is calculated. This is an estimate of interest over the full new term, not a comparison with the remaining cost of the existing loan.

Worked Example

Using the calculator’s defaults: principal P = $20,000, APR = 8%, and term = 5 years.

1. Convert the APR to a monthly decimal rate: r = 8 ÷ 1,200 = 0.0066667.
2. Convert the term to payments: n = 5 × 12 = 60.
3. Substitute in the payment formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] ≈ $405.53 per month after rounding to cents.
4. Calculate total interest using that rounded payment: $405.53 × 60 − $20,000 = $4,331.80.

The estimated payment is $405.53 per month, and estimated interest across 60 payments is $4,331.80. Small differences can arise if a lender uses a different payment schedule or calculates interest using daily balances.

Assumptions

• The APR and payment amount stay fixed throughout the term.
• Payments are equal monthly payments, made at the end of each monthly period.
• Interest is modelled monthly at APR ÷ 12.
• The calculation excludes lender fees, taxes, insurance, add-on products, and other charges unless they are included in the loan amount entered.
• There are no missed payments, extra payments, or changes to the schedule.

What Car Loan Refinancing Means

Refinancing replaces an existing auto loan with a new loan, generally secured by the same vehicle. The new loan pays off the old loan, and the borrower then makes payments under the new agreement. The calculator estimates the new loan’s payment; it does not determine whether a lender will offer particular terms or whether refinancing fits a person’s circumstances.

The amount to refinance may differ from the vehicle’s original purchase price. It is usually based on the payoff amount required to close the current loan, with any eligible charges or other amounts added or paid separately. A payoff quote can include interest accrued since the last payment and may be valid only through a stated date. Use the amount the new lender would actually finance, rather than the car’s current market value, as the calculator’s principal input.

How to Compare the New Loan

A lower monthly payment by itself does not show the full cost. A longer term can reduce the payment while increasing the number of months interest accrues. To make a meaningful comparison, gather the current loan’s payoff amount, remaining payment schedule, and any fees for both transactions, then compare the remaining cost of the current loan with the total payments and charges under the proposed loan.

• Compare APRs and terms shown in actual written offers; do not assume a quoted rate is guaranteed.
• Compare total payments over each loan’s remaining or new term, including any financed fees.
• Check whether the new amount includes costs that are not part of the current payoff.
• Consider the term end date as well as the monthly payment. Extending repayment can mean carrying the debt longer.
• Check the existing contract and proposed agreement for relevant payoff, payment, and vehicle requirements.

For example, reducing a payment by spreading a balance over more months does not necessarily reduce total interest. Conversely, a shorter term can raise the monthly payment even if the total interest estimate falls. The calculator can show different scenarios, but it does not incorporate fees or calculate the current loan’s remaining cost automatically.

Limits and Common Mistakes

One common mistake is entering the original amount borrowed instead of the current payoff or proposed refinance principal. Another is treating the APR as a monthly rate: the formula divides an annual percentage entered as 8 for 8% by 1,200, not by 12 alone. Enter the loan term in years, as labelled; the calculator converts it to months.

The estimate also should not be read as a lender quote. Actual contracts may use different timing, rounding, fee treatment, or interest calculations. A lender’s disclosed payment and total repayment figures are the relevant figures for a specific offer. The calculator does not model the car’s value, vehicle condition, approval, credit decisions, taxes, insurance, or legal and tax consequences.

Frequently Asked Questions

What does refinancing a car loan do?
It replaces an existing auto loan with a new one. The new loan’s proceeds generally pay the old loan’s payoff, and payments then follow the new contract’s terms.

Does refinancing always lower the monthly payment?
No. The payment depends on the new principal, APR, and term. A shorter term or a different rate can produce a higher payment, and the calculator cannot predict a lender’s offer.

Can a lower payment mean paying more overall?
Yes. A longer repayment term may lower each monthly payment while increasing total interest or extending the time payments are due. Compare total costs and term lengths, not just monthly amounts.

What loan amount should I enter?
Use the amount proposed for the new loan. To estimate a payoff-based refinance, obtain the current lender’s payoff figure and account for any charges included in the new principal.

Does the calculator include refinance fees?
No. It includes only the principal, APR, and term entered. If fees are financed, they may be reflected in the principal; otherwise, include them separately when comparing the full cost of offers.

This result is an estimate; the lender’s disclosure gives the exact figures.

Related

• Reducing Balance Loan Formula and Calculator
• Principal Balance on a Loan: How It Works
• Reducing Balance Loan Calculator and Formula

in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | round(p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)), 2) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2