Refinance Car Loan Calculator: Monthly Payment

A refinance car loan calculator estimates your new monthly payment from the amount refinanced, the new annual percentage rate (APR), and the loan term. Enter those figures to see the payment and the total interest implied by the estimate; use figures from a lender’s offer for a personalized comparison.

Formula

The calculator uses the standard fixed-payment loan formula:

Monthly payment = P × r ÷ [1 − (1 + r)⁻ⁿ]

• P is the amount refinanced, in dollars.
• r is the monthly interest rate, calculated as APR ÷ 1,200. APR is entered as a percentage per year.
• n is the number of monthly payments, calculated as loan term in years × 12.

Total interest is calculated as monthly payment × n − P. The displayed monthly payment is rounded to cents, and total interest uses that rounded payment. The formula assumes equal monthly payments and a fixed rate; the estimate does not derive an APR from fees or other costs.

Worked Example

Using the calculator’s default inputs—$20,000, 8% APR, and five years:

1. Convert the APR to a monthly rate: 8 ÷ 1,200 = 0.0066667.
2. Find the number of payments: 5 × 12 = 60.
3. Substitute into the payment formula: $20,000 × 0.0066667 ÷ [1 − (1 + 0.0066667)⁻⁶⁰].
4. The monthly payment is **$405.53** when rounded to cents.
5. Using the rounded payment, total interest is ($405.53 × 60) − $20,000 = **$4,331.80**.

Assumptions

• The interest rate stays fixed throughout the term.
• Payments are equal, made monthly, with the first payment one month after the loan begins.
• Interest is compounded monthly at the APR divided by 12.
• Fees, taxes, insurance, add-on products, and other costs are not included unless reflected in the loan amount or APR you enter.

What a Refinance Payment Estimate Shows

Refinancing replaces an existing auto loan with a new loan. The new lender or servicer pays off the existing balance according to the transaction, and you then make payments under the replacement loan’s terms. The calculator focuses on the new loan’s basic amortizing payment; it does not determine whether an application will be approved or what offer a lender will make.

For a useful estimate, the loan amount should represent the amount that would actually be financed, not necessarily the car’s purchase price or the original loan amount. The current payoff quote can differ from the balance shown on a recent statement because interest may accrue between statement and payoff dates, and the quote may account for other items. Ask the current servicer for a payoff figure and ask the prospective lender which costs, if any, are included in the new principal.

How to Compare the New Payment With the Current Loan

A lower monthly payment alone does not show the full cost of refinancing. It can result from a lower APR, a longer repayment term, or both. Extending the term spreads repayment over more months and may increase total interest, even if the monthly bill falls. Conversely, a shorter term can increase the payment while reducing the number of months interest accrues.

Compare estimates using the same information and look at more than the payment:

• Use the actual payoff amount and the proposed amount financed.
• Compare APR and term, and confirm whether the APR incorporates fees.
• Compare total scheduled payments and interest over the full term.
• Account separately for any upfront charges or other costs not included in the calculator.
• Check whether the new loan changes payment dates or includes optional products.

For example, a quote that lowers the payment by lengthening the term is not directly comparable with one that keeps the remaining term unchanged. To understand the effect of term alone, calculate each offer with its own principal, APR, and number of months, then review total payments and any excluded charges. A precise comparison may require lender disclosures, since this simple calculator cannot model every contract detail.

Common Inputs and Calculation Limits

Use the APR as a percentage, such as 8 for 8%, not 0.08. The calculator converts it to a monthly decimal rate by dividing by 1,200. Enter the term in years; the formula converts it to months. Mixing months and years or entering a decimal APR in the wrong format can produce a dramatically incorrect result.

The result is an estimate rather than a payment schedule. Rounding the payment to cents can make the final payment slightly different from the others, and a lender may calculate daily interest or handle the first payment date differently. The formula also cannot account for a changing rate, irregular payments, deferred amounts, a balloon payment, or a contract’s specific fee treatment. If the APR or loan term is not known, obtain the actual proposed figures rather than treating the default values as an offer.

Frequently Asked Questions

How do I calculate a refinance car loan payment?
Convert APR to a monthly rate by dividing it by 1,200, convert the term to months, and use the fixed-payment formula shown above. The calculator performs those steps and rounds the payment to cents.

Does refinancing a car loan always lower the monthly payment?
No. The new payment depends on the amount financed, APR, and term. A different balance or a shorter term can produce a higher payment, and a longer term can lower the monthly amount while increasing total interest.

Should I enter my current balance or payoff amount?
For an estimate of the replacement loan, use the amount that would actually be financed. Request a current payoff quote and confirm with the prospective lender whether fees or other amounts are added to the new principal.

Does this calculator include refinancing fees?
No separate fee input is provided. If a cost is financed, it may be reflected in the loan amount; otherwise, it is not included in the payment or total-interest estimate. Check the lender’s written figures for included and upfront costs.

Why is the total interest not just the APR multiplied by the balance?
Interest is charged over time on the outstanding balance, which declines as principal is repaid. The amortizing payment formula accounts for that declining balance and the number of monthly payments.

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

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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 | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2