What this calculator does
Find out whether a new car loan would really save you money. Enter what you owe, your current rate and the months left. Then enter the offer you're considering. You'll see your new payment, your monthly savings and the month the fees are paid back.
The lifetime number matters most here. Stretching a car loan can lower your payment and still cost you more overall. This page shows both, so a smaller payment can't hide a bigger bill. It also shows what you'd owe against what the car is worth, because cars lose value as you pay.
Where it's used
Why this math matters outside the classroom:
- Rate shopping. A driver owing $22,000 sees that moving from 8.5% to 5.75% saves about $28.11 a month.
- Spotting a trap. A buyer sees a 72-month offer cuts the payment to $362.01 but costs $336.32 more overall.
- Timing a sale. An owner who plans to sell within a year sees the fees take 11 months to pay back.
- Checking the balance. A driver divides a $22,000 loan by a $24,000 car value to find a loan-to-value of about 91.7%.
Grade level and standards: Grades 11–12; Common Core State Standards for Mathematics HSA.SSE.B.4. © Copyright 2010. National Governors Association Center for Best Practices and Council of Chief State School Officers. All rights reserved.
How to use it
- Enter your loan balance, your current rate and the months left.
- Enter the new rate, the new length in months and any fees.
- Choose whether you'd pay the fees in cash or add them to the loan.
- Enter the car's value. Then read your monthly savings, lifetime savings and break-even month.
What the inputs mean
- Current loan balance
- Your payoff amount, which your lender can give you. It can differ a little from the balance on your statement.
- Refinance fees
- Any lender fee, the cost of transferring the title, and any charge for paying off your old loan early. Many states charge something to change the lien holder (the lender named on the title).
- What the car is worth today
- A fair market value for your car today. It's only used to show how much you owe compared with what the car is worth.
Formula and method
i = yearly rate ÷ 12; payment = P × i ÷ (1 − (1 + i)^(−n)) monthly savings = current payment − new payment break-even month = fees ÷ monthly savings, rounded up lifetime savings = current payment × months left − new payment × new months − fees paid in cash loan-to-value = new loan ÷ car value
P is the amount borrowed, i is the monthly interest rate and n is the number of monthly payments. The same formula gives both payments, so they're fair to compare.
The break-even month is when your savings have covered the fees. It only counts if the new loan is also cheaper overall.
Lifetime savings add up every dollar still to come on each loan. That's why a longer loan can show monthly savings and a negative lifetime number at once.
Worked example
You owe $22,000 at 8.5% with 48 months left. A new offer is 5.75% for 48 months, with $300 in fees paid in cash. The car is worth $24,000.
- Current payment: about $542.26 a month.
- New payment: about $514.15 a month.
- Monthly savings: $542.26 − $514.15 ≈ $28.11.
- Break-even: $300 ÷ $28.11 ≈ 10.7, so month 11.
- Left to pay on the current loan: about $26,028.61.
- To pay on the new loan, with the fees: about $24,979.33.
- Lifetime savings: $26,028.61 − $24,979.33 ≈ $1,049.28.
Result: You'd save about $28.11 a month and about $1,049.28 overall, and the fees are paid back in month 11.
Understanding the result
Keep the car past the break-even month, or the refinance loses money. In the example, that's 11 months.
Watch the lifetime number when you change the length. Stretch the example to 72 months, and the payment falls to about $362.01. But the loan then costs about $336.32 more overall, even at the lower rate.
A loan-to-value above 100% means you owe more than the car is worth. Some lenders won't refinance that, and selling the car would leave you with a balance.
Assumptions and limitations
- Both loans have fixed rates and equal payments at the end of each month.
- Your current payment is worked out from the balance, rate and months left, so it may differ slightly from your statement.
- You make every payment on time and keep the loan to the end.
- Payments aren't rounded to the cent.
- It doesn't cover gap insurance refunds or add-on products tied to your old loan.
- It doesn't check whether you'd qualify. Lenders set their own limits on age, mileage and the amount you owe.
- These are estimates, not a loan offer. Use the rate you've actually been quoted.
Frequently asked questions
When is refinancing a car worth it?
It usually helps when the new rate is lower and the length stays about the same. Check that the lifetime savings are positive and you'll keep the car past the break-even month.
Why does a longer loan cost more if the rate is lower?
You pay interest for more months. The lower rate helps, but the extra months can use up that benefit. Try the same months as your current loan to see the pure rate savings.
Should I add the fees to the loan?
Adding them means no cash today, but you'll pay interest on them. Try both options and compare the lifetime savings.
How is this different from the mortgage refinance page?
The math is the same, but this page works in months and adds the car's value. Car loans are short, fees are small, and the car loses value, so those are the numbers that matter.
How this calculator is checked
Method: Standard level-payment amortization for both loans; simple break-even of fees ÷ monthly savings. Tests use values worked in separate 50-digit decimal arithmetic. The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-31. Found a problem? Tell us.
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