Refinance Car Loan Calculator: Compare Payments and Interest

A car loan refinance calculator estimates the payment and total interest on a replacement loan using its amount, APR, and term. Enter the amount being refinanced, the new loan’s annual percentage rate, and its term to see the estimated monthly payment and interest; compare those results with your current loan figures separately.

Formula

The calculator uses the fixed-payment amortization formula. It converts the annual percentage rate (APR) to a monthly rate, then calculates the level payment that repays the stated principal over the selected number of months.

• Monthly payment: M = P × r ÷ [1 − (1 + r)⁻ⁿ]
• Total interest: I = M × n − P
• Monthly rate: r = APR ÷ 1,200
• Number of payments: n = years × 12

P is the loan amount in dollars, APR is the annual rate entered as a percentage, r is the monthly rate as a decimal, n is the number of monthly payments, M is the estimated monthly payment in dollars, and I is interest in dollars across all scheduled payments. The payment is rounded to cents before total interest is calculated. The formula assumes regular monthly payments and a fixed rate.

Worked Example

Using the calculator’s default inputs: P = $20,000, APR = 8%, and a five-year term.

1. Convert the annual APR to a monthly rate: r = 8 ÷ 1,200 = 0.0066667.
2. Convert the term to payments: n = 5 × 12 = 60.
3. Substitute into the payment formula: M = 20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰].
4. The monthly payment is approximately $405.53, rounded to cents.
5. Total interest = $405.53 × 60 − $20,000 = $4,331.80.

Assumptions

• The interest rate is fixed for the entire term.
• Payments are made monthly at the end of each payment period.
• Interest is calculated monthly using APR divided by 12.
• The estimate excludes lender fees, taxes, insurance, and other charges. It also does not include vehicle-related costs or any optional products.

How to Use the Calculator for a Refinance

Use the amount you expect to borrow for the replacement loan, not automatically the car’s original purchase price. A payoff quote from the current loan servicer can help establish the amount needed to pay off that loan on a specified date. The figure may differ from the balance shown on a regular statement because interest can accrue between statement dates, and the quote may have a limited validity period.

Enter the APR and term quoted for the proposed loan, if available. If you are exploring possibilities rather than evaluating a specific offer, the calculator can show hypothetical outcomes, but it cannot tell you which rates or terms a lender will offer. Get exact figures, including the amount financed and itemized charges, directly from the lender.

• Keep the loan amount consistent when comparing options.
• Compare the payment and total interest, not just the monthly payment.
• Include any fees financed into the replacement loan in the amount entered.
• For a current-loan comparison, obtain its remaining payment schedule, payoff amount, and remaining term.

How to Interpret the Results

A lower monthly payment does not by itself mean the refinance costs less overall. Extending the term can reduce each payment while adding more payment periods, potentially increasing total interest. Conversely, a shorter term can mean higher monthly payments while reducing the time interest accrues. This calculator reports the replacement loan’s estimated payment and interest only; it does not automatically subtract the current loan’s remaining interest or include costs of switching.

For a fuller comparison, add costs not included in the estimate to the replacement loan’s total cost, and compare the result with the remaining cost of the current loan. A useful comparison needs consistent assumptions and actual lender disclosures. The calculator’s “total interest” is not the same as total cash paid: scheduled payments also repay principal.

Costs, Limits, and Common Mistakes

Refinancing may involve charges, and their amount and treatment depend on the specific offer. A charge paid upfront affects cash outlay; a charge added to the new principal increases the amount on which interest is calculated. The calculator has no separate fee input, so include financed charges in the loan amount, and assess upfront charges outside its result. Do not assume a quoted APR includes every expense without checking the lender’s disclosure.

• Using the car’s value as the loan amount: The relevant amount is the new borrowing needed, which may be based on payoff and financed charges.
• Comparing different terms without noticing: A smaller payment can result from a longer term, not a lower overall cost.
• Entering the wrong rate units: Enter an annual percentage, such as 8 for 8%, not 0.08.
• Treating estimates as exact: Rounding, payment dates, lender calculations, and fees can make actual figures differ.
• Overlooking a longer repayment period: If the replacement loan lasts longer than the current loan has left, the car may be financed for more time.

The model does not account for variable rates, irregular payments, a changing payoff amount, skipped or deferred payments, or a lender’s specific daily-interest method. It also does not assess vehicle value, eligibility, credit decisions, or whether a particular offer is suitable. Those details require information from the lender and are outside this arithmetic estimate.

Frequently Asked Questions

What information do I need to calculate a car refinance payment?
Enter the amount to be borrowed, the proposed annual APR, and the loan term. For a real comparison, also obtain the current loan’s payoff amount, remaining schedule, and any charges on the proposed loan.

Does refinancing always lower the monthly payment?
No. The result depends on the new principal, APR, and term. A longer term can lower a monthly payment, while a shorter term or larger financed amount can raise it.

Can a lower payment mean I pay more interest?
Yes. If the new loan extends repayment, interest may accrue over more months. Compare total costs and the remaining term as well as the payment.

Should I use my current balance or payoff amount?
For estimating the replacement borrowing, a current payoff quote is generally the more relevant starting figure. Request an up-to-date quote from the servicer and check its date and included amounts.

Does this calculator include refinance fees?
No. It calculates principal-and-interest payments from the amount entered. Add financed fees to that amount, and account separately for charges paid upfront.

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