Compare the loan you have with the one you're offered. See the new payment, the total you'll pay, and how fast the savings cover the fees.
Estimates for planning, not financial, tax or legal advice. Figures use US rules unless the page says otherwise.
How it's calculated
Current payment = B × i₁ ÷ (1 − (1 + i₁)−n₁)
New payment = (B + costs if rolled in) × i₂ ÷ (1 − (1 + i₂)−n₂)
Net savings = current payment × n₁ − (new payment × n₂ + costs paid upfront)
Break-even (months) = costs ÷ monthly savings, rounded up
B is the balance you owe today, n₁ the months left, and i the APR ÷ 12. The current payment is worked out from what you owe, so it may differ from your statement by a few cents.
Worked example
You owe $22,000 at 9% with 48 months left, so you pay $547.47 a month and will pay $4,278.60 more in interest. A credit union offers 6% for 48 months with $300 of fees paid upfront. The new payment is $516.67, saving $30.80 a month, and the total drops from $26,278.60 to $25,100.19. You come out $1,178.41 ahead, and the fees are paid back after 10 months.
Now try a 72-month loan at 8% instead. The payment falls to $385.73, but you'd pay $1,494.05 more overall because you're paying interest for two extra years. The CFPB warns that a longer term can mean cheaper monthly payments but more interest over the life of the loan.
Before you refinance
- Check your current contract for a prepayment penalty. When you refinance you pay off the old loan in full, so a penalty can apply.
- Compare APRs and the total cost, not just the payment.
- Ask about every fee, including title or lien transfer fees charged by your state.
How to lower your car payment without refinancing
If the goal is a smaller payment because money is tight, the CFPB suggests contacting your lender or servicer as soon as possible. Options may include an affordable payment plan, changing your due date, or pausing payments through forbearance. Get any new agreement in writing and ask how it affects your credit report. If you owe less than the car is worth, selling it is another option.
Limitations
It assumes fixed rates and payments made on schedule. It doesn't include GAP or warranty refunds you may get when the old loan closes.
Sources
How we checked this
Before every update, this calculator is run in a real browser with these known answers, and it must match all of them:
- $22,000 at 9% with 48 months left, refinanced to 6% for 48 months with $300 fees: $30.80 a month less ✓
- Same: $1,178.41 net savings, break-even 10 months ✓
- Fees added to the loan: $23.75 a month, break-even 13 months ✓
- 8% for 72 months, no fees: lower payment but $1,494.05 more overall ✓
- Same rate and term, no costs: no change ✓
Last checked October 26, 2026. Spotted something wrong? The math is done in your browser with the formula shown on this page, so you can check any result by hand.
Questions people ask
When does refinancing a car loan make sense?
When the new rate is clearly lower, the fees are small, and you don't stretch the term so far that total interest goes up. If your credit has improved since you bought the car, it's worth checking.
How can I lower my car payment without refinancing?
Call your lender. The CFPB says options may include a payment plan, a new due date or a short pause through forbearance. Paused months usually still add interest or extend the loan, so get the terms in writing.
Does refinancing a car hurt your credit?
Applying usually triggers a credit inquiry and opens a new account, which can dip your score a little at first. On-time payments help it recover.
What is the break-even point on an auto refinance?
It's how many months of lower payments it takes to make back the fees and any penalty. Here it's the costs divided by the monthly savings.
Can I refinance if I owe more than the car is worth?
It's harder. Many lenders limit how much they'll lend against the car's value. You may need to pay the balance down first.