Auto Refinance Rates Calculator
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Auto Refinance Rates Calculator
Your Potential Savings
Enter your details to see potential savings.
Understanding Auto Refinancing and Savings
Auto refinancing is the process of replacing your current car loan with a new one, typically with more favorable terms. This can lead to significant savings over the life of your loan through lower interest rates, reduced monthly payments, or a combination of both. Our Auto Refinance Rates Calculator helps you estimate the potential financial benefits of refinancing your existing auto loan.
How the Calculator Works:
The calculator uses standard loan amortization formulas to compare your current loan's total interest cost with the total interest cost of a refinanced loan. Here's a breakdown of the math:
-
Current Loan Total Interest:
This is calculated by first determining the current monthly payment using the loan balance, interest rate, and remaining term. Then, it calculates the total amount paid over the remaining term and subtracts the current loan balance to find the total interest.
The monthly payment (M) formula is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
- P = Principal loan amount (Current Loan Balance)
- i = Monthly interest rate (Current Interest Rate / 12 / 100)
- n = Number of months remaining (Remaining Months on Loan)
Total Interest = (M * n) – P
-
New Refinanced Loan Total Interest:
This uses the same monthly payment formula but with the new interest rate and the new loan term. The principal amount is assumed to be the current loan balance, as refinancing typically means transferring the remaining balance.
New Monthly Payment (M_new) is calculated using:
M_new = P [ i_new(1 + i_new)^n_new ] / [ (1 + i_new)^n_new – 1]
Where:
- P = Principal loan amount (Current Loan Balance)
- i_new = New monthly interest rate (New Refinance Interest Rate / 12 / 100)
- n_new = New number of months for the loan (New Loan Term Months)
New Total Interest = (M_new * n_new) – P
-
Total Interest Savings:
This is the difference between the total interest you would pay on your current loan and the total interest you would pay on the new, refinanced loan.
Total Savings = Current Loan Total Interest - New Refinanced Loan Total Interest
When Should You Consider Auto Refinancing?
You should consider refinancing your auto loan if:
- Your Credit Score Has Improved: A higher credit score often qualifies you for lower interest rates.
- Interest Rates Have Fallen: Market interest rates may have dropped since you originally took out your loan.
- You Need to Lower Your Monthly Payments: Extending the loan term (while potentially paying more interest overall) can reduce your immediate payment burden.
- You Want to Pay Off Your Loan Faster: If you secure a lower rate and keep a similar or shorter term, you can reduce the total interest paid and pay off your car sooner.
- Your Current Lender's Service is Unsatisfactory: Refinancing allows you to move to a lender with better customer service or online tools.
Use this calculator to quickly compare your current loan's financial commitment with a potential new loan. Even a small reduction in interest rate can lead to substantial savings over time, freeing up money for other financial goals.
function calculateRefinance() {
var currentLoanBalance = parseFloat(document.getElementById("currentLoanBalance").value);
var currentInterestRate = parseFloat(document.getElementById("currentInterestRate").value);
var remainingMonths = parseInt(document.getElementById("remainingMonths").value);
var newInterestRate = parseFloat(document.getElementById("newInterestRate").value);
var newLoanTermMonths = parseInt(document.getElementById("newLoanTermMonths").value);
var resultDiv = document.getElementById("result");
if (isNaN(currentLoanBalance) || isNaN(currentInterestRate) || isNaN(remainingMonths) ||
isNaN(newInterestRate) || isNaN(newLoanTermMonths) ||
currentLoanBalance <= 0 || currentInterestRate < 0 || remainingMonths <= 0 ||
newInterestRate < 0 || newLoanTermMonths 0) {
currentMonthlyPayment = currentLoanBalance * (currentMonthlyRate * Math.pow(1 + currentMonthlyRate, remainingMonths)) / (Math.pow(1 + currentMonthlyRate, remainingMonths) – 1);
currentTotalInterest = (currentMonthlyPayment * remainingMonths) – currentLoanBalance;
} else {
// If interest rate is 0, total interest is 0
currentTotalInterest = 0;
currentMonthlyPayment = currentLoanBalance / remainingMonths;
}
// Calculate new total interest
var newMonthlyRate = newInterestRate / 100 / 12;
var newTotalInterest = 0;
var newMonthlyPayment = 0;
if (newMonthlyRate > 0) {
newMonthlyPayment = currentLoanBalance * (newMonthlyRate * Math.pow(1 + newMonthlyRate, newLoanTermMonths)) / (Math.pow(1 + newMonthlyRate, newLoanTermMonths) – 1);
newTotalInterest = (newMonthlyPayment * newLoanTermMonths) – currentLoanBalance;
} else {
// If interest rate is 0, total interest is 0
newTotalInterest = 0;
newMonthlyPayment = currentLoanBalance / newLoanTermMonths;
}
var totalInterestSavings = currentTotalInterest – newTotalInterest;
// Format results
var formattedSavings = totalInterestSavings.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedCurrentPayment = currentMonthlyPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedNewPayment = newMonthlyPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var savingsMessage;
if (totalInterestSavings > 0) {
savingsMessage = "Potential Total Interest Savings:
" + formattedSavings + "";
} else if (totalInterestSavings < 0) {
savingsMessage = "Note: This refinance may increase total interest paid by
" + Math.abs(totalInterestSavings).toLocaleString(undefined, { style: 'currency', currency: 'USD' }) + ".";
} else {
savingsMessage = "No significant savings projected based on these rates.";
}
resultDiv.innerHTML = "
Estimated Monthly Payments
" +
"" + formattedCurrentPayment + "
(Current)" +
"" + formattedNewPayment + "
(New)" +
"
" +
"" + savingsMessage + "";
}