Estimate your potential monthly savings and total interest paid by refinancing your auto loan.
Your Refinance Estimate
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Understanding Auto Loan Refinancing
Refinancing an auto loan involves replacing your existing car loan with a new one, typically with different terms. The primary goal of refinancing is usually to secure a lower interest rate, a more manageable monthly payment, or a shorter/longer loan term that better suits your financial situation. This calculator helps you estimate the potential financial benefits of refinancing your current auto loan.
How the Calculator Works:
The auto refinance calculator uses the standard loan payment formula (Amortization Formula) to determine the monthly payment for both your current loan and the potential new loan. It then compares these payments and calculates the total interest paid over the life of each loan to highlight potential savings.
The formula for calculating the monthly payment (M) of a loan is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount (the loan balance)
i = Monthly interest rate (Annual rate / 12)
n = Total number of payments (Loan term in months)
The calculator performs the following steps:
Calculates the monthly payment for your current loan using its balance, interest rate, and remaining term.
Calculates the total interest paid on your current loan (Current Monthly Payment * Remaining Term – Current Loan Balance).
Calculates the monthly payment for a potential new loan using the current balance, the proposed new interest rate, and the proposed new loan term.
Calculates the total interest paid on the new loan (New Monthly Payment * New Term – Current Loan Balance).
Compares the monthly payments and total interest paid to show your estimated savings.
When to Consider Refinancing:
Lower Interest Rates Available: If market interest rates have dropped since you took out your original loan, or your credit score has improved significantly, you might qualify for a lower APR.
Shorter Loan Term: You might want to refinance to pay off your car faster, even if the monthly payment increases slightly.
Lower Monthly Payments: If you need to free up cash flow, refinancing to a longer term could lower your monthly payment, though this usually results in paying more interest overall.
Negative Equity: If you owe more on your loan than your car is worth (upside-down loan), refinancing might be difficult, but some programs exist.
Important Considerations:
Fees: Some lenders charge origination fees or other costs associated with refinancing. Ensure these are factored into your decision.
Credit Score: Your credit score is crucial for qualifying for a new loan and securing a favorable interest rate.
Loan Term Extension: While a longer term can lower monthly payments, it means you'll be paying interest for a longer period, potentially increasing the total cost.
Early Payoff Penalties: Check your current loan agreement for any penalties for paying off the loan early.
Use this calculator as a tool to explore potential savings, but always consult with potential lenders and review all loan documents carefully before making a decision.
function calculateMonthlyPayment(principal, annualRate, termInMonths) {
if (principal <= 0 || annualRate < 0 || termInMonths <= 0) {
return 0;
}
var monthlyRate = annualRate / 100 / 12;
var numberOfPayments = termInMonths;
var monthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
return isNaN(monthlyPayment) ? 0 : monthlyPayment;
}
function calculateTotalInterest(monthlyPayment, termInMonths, principal) {
if (monthlyPayment <= 0 || termInMonths <= 0) {
return 0;
}
var totalPaid = monthlyPayment * termInMonths;
var totalInterest = totalPaid – principal;
return isNaN(totalInterest) ? 0 : totalInterest;
}
function formatCurrency(amount) {
return '$' + Number(amount.toFixed(2)).toLocaleString();
}
function calculateRefinance() {
var currentLoanBalance = parseFloat(document.getElementById("currentLoanBalance").value);
var currentInterestRate = parseFloat(document.getElementById("currentInterestRate").value);
var currentLoanTermMonths = parseInt(document.getElementById("currentLoanTermMonths").value);
var newInterestRate = parseFloat(document.getElementById("newInterestRate").value);
var newLoanTermMonths = parseInt(document.getElementById("newLoanTermMonths").value);
var resultDiv = document.getElementById("result");
var resultValue = document.getElementById("result-value");
var resultLabel = document.getElementById("result-label");
var additionalInfoDiv = document.getElementById("additional-info");
// Input validation
if (isNaN(currentLoanBalance) || currentLoanBalance <= 0 ||
isNaN(currentInterestRate) || currentInterestRate < 0 ||
isNaN(currentLoanTermMonths) || currentLoanTermMonths <= 0 ||
isNaN(newInterestRate) || newInterestRate < 0 ||
isNaN(newLoanTermMonths) || newLoanTermMonths 0.01) { // Significant monthly saving
displayValue = formatCurrency(monthlyPaymentDifference);
displayLabel = "Potential Monthly Savings";
additionalInfo = "Your new loan's estimated monthly payment is lower. ";
if (totalInterestDifference > 0) {
additionalInfo += `You could also save approximately ${formatCurrency(totalInterestDifference)} in total interest over the life of the loan.`;
} else if (totalInterestDifference < 0) {
additionalInfo += `However, extending the loan term may result in paying approximately ${formatCurrency(Math.abs(totalInterestDifference))} more in total interest.`;
} else {
additionalInfo += `The total interest paid remains similar.`;
}
} else if (monthlyPaymentDifference 0) {
additionalInfo += `This is because you are paying off the loan faster, saving approximately ${formatCurrency(totalInterestDifference)} in total interest.`;
} else if (totalInterestDifference 0.01) {
additionalInfo = `While monthly payments are similar, you could save approximately ${formatCurrency(totalInterestDifference)} in total interest by refinancing.`;
} else if (totalInterestDifference < -0.01) {
additionalInfo = `While monthly payments are similar, you may end up paying approximately ${formatCurrency(Math.abs(totalInterestDifference))} more in total interest.`;
} else {
additionalInfo = "Monthly payments and total interest paid are estimated to be very similar.";
}
}
resultValue.textContent = displayValue;
resultLabel.textContent = displayLabel;
additionalInfoDiv.innerHTML = additionalInfo;
}