Refinancing may not result in savings with these terms.
Understanding Auto Refinancing and How This Calculator Works
Auto refinancing involves replacing your existing car loan with a new one, typically with better terms such as a lower interest rate or a different loan duration. This can lead to significant savings over the life of the loan, especially if interest rates have fallen or your credit score has improved since you initially financed your vehicle.
When considering refinancing, it's crucial to compare the new loan's potential monthly payments and the total interest you'll pay against your current loan. This calculator is designed to help you visualize these potential benefits and make an informed decision.
How the Calculator Works:
The calculator uses standard loan amortization formulas to estimate your monthly payments and total interest paid for both your current loan and the proposed new loan.
Current Monthly Payment: Calculated using the current loan balance, current annual interest rate, and current loan term.
New Monthly Payment: Calculated using the current loan balance (assuming no additional principal is paid off before refinancing), the new proposed annual interest rate, and the new proposed loan term.
Monthly Payment Difference: The difference between the current and new monthly payments. A negative number indicates a potential reduction in your monthly outlay.
Total Interest Paid (Current): The sum of all interest payments over the entire term of your current loan.
Total Interest Paid (New): The sum of all interest payments over the entire term of the proposed new loan.
Total Interest Savings: The difference between the total interest paid on the current loan and the total interest paid on the new loan. This highlights the long-term financial benefit of refinancing.
Key Inputs Explained:
Current Loan Balance: The exact amount you still owe on your current auto loan.
Current Annual Interest Rate (%): The yearly interest rate you are currently paying on your auto loan.
Current Loan Term (Months): The remaining number of months left on your current auto loan contract.
New Proposed Annual Interest Rate (%): The interest rate offered by a lender for a new refinance loan. Lower is generally better.
New Proposed Loan Term (Months): The duration of the new refinance loan. A longer term can lower monthly payments but increase total interest paid. A shorter term increases monthly payments but reduces total interest paid.
When to Consider Refinancing:
Lower Interest Rates: If market interest rates have dropped significantly since you took out your original loan, or if your credit score has improved, allowing you to qualify for a lower APR.
Monthly Payment Relief: If you need to lower your monthly expenses, extending the loan term might be an option, though be mindful of the increased total interest.
Changing Financial Circumstances: Unexpected financial needs may require adjusting your loan terms for better cash flow management.
Disclaimer: This calculator provides an estimate based on the inputs provided and standard financial formulas. It does not include potential fees associated with refinancing (e.g., application fees, title transfer fees) which could affect the overall savings. Always consult with financial professionals and review loan offer details carefully before making any decisions.
function calculateMonthlyPayment(principal, annualRate, termMonths) {
if (principal <= 0 || annualRate < 0 || termMonths <= 0) {
return 0;
}
var monthlyRate = (annualRate / 100) / 12;
var payment = (principal * monthlyRate) / (1 – Math.pow(1 + monthlyRate, -termMonths));
return isNaN(payment) ? 0 : payment;
}
function calculateTotalInterest(principal, annualRate, termMonths) {
var monthlyPayment = calculateMonthlyPayment(principal, annualRate, termMonths);
if (monthlyPayment === 0) return 0;
var totalPaid = monthlyPayment * termMonths;
var totalInterest = totalPaid – principal;
return isNaN(totalInterest) ? 0 : totalInterest;
}
function calculateRefinance() {
var currentLoanBalance = parseFloat(document.getElementById("currentLoanBalance").value);
var currentInterestRate = parseFloat(document.getElementById("currentInterestRate").value);
var currentLoanTerm = parseInt(document.getElementById("currentLoanTerm").value);
var newInterestRate = parseFloat(document.getElementById("newInterestRate").value);
var newLoanTerm = parseInt(document.getElementById("newLoanTerm").value);
var resultContainer = document.getElementById("result-container");
var currentMonthlyPaymentDisplay = document.getElementById("currentMonthlyPaymentDisplay");
var newMonthlyPaymentDisplay = document.getElementById("newMonthlyPaymentDisplay");
var monthlyPaymentDifference = document.getElementById("monthlyPaymentDifference");
var totalInterestPaidCurrentDisplay = document.getElementById("totalInterestPaidCurrent");
var totalInterestPaidNewDisplay = document.getElementById("totalInterestPaidNew");
var totalInterestSavingsDisplay = document.getElementById("totalInterestSavings");
var noSavingsMessage = document.getElementById("noSavingsMessage");
// Clear previous results and messages
currentMonthlyPaymentDisplay.textContent = "";
newMonthlyPaymentDisplay.textContent = "";
monthlyPaymentDifference.textContent = "";
totalInterestPaidCurrentDisplay.textContent = "";
totalInterestPaidNewDisplay.textContent = "";
totalInterestSavingsDisplay.textContent = "";
noSavingsMessage.style.display = 'none';
resultContainer.style.display = 'block';
// Input validation
if (isNaN(currentLoanBalance) || currentLoanBalance <= 0 ||
isNaN(currentInterestRate) || currentInterestRate < 0 ||
isNaN(currentLoanTerm) || currentLoanTerm <= 0 ||
isNaN(newInterestRate) || newInterestRate < 0 ||
isNaN(newLoanTerm) || newLoanTerm <= 0) {
resultContainer.style.display = 'none';
alert("Please enter valid positive numbers for all fields.");
return;
}
// Prevent calculation if new rate is higher than current or term is longer AND rate is same or higher
var potentialSavings = false;
if (newInterestRate < currentInterestRate) {
potentialSavings = true;
} else if (newInterestRate === currentInterestRate && newLoanTerm < currentLoanTerm) {
potentialSavings = true;
}
// Calculate current loan payments and interest
var currentMonthlyPayment = calculateMonthlyPayment(currentLoanBalance, currentInterestRate, currentLoanTerm);
var totalInterestPaidCurrent = calculateTotalInterest(currentLoanBalance, currentInterestRate, currentLoanTerm);
// Calculate new loan payments and interest
var newMonthlyPayment = calculateMonthlyPayment(currentLoanBalance, newInterestRate, newLoanTerm);
var totalInterestPaidNew = calculateTotalInterest(currentLoanBalance, newInterestRate, newLoanTerm);
// Display current loan details
currentMonthlyPaymentDisplay.innerHTML = "Current Estimated Monthly Payment: $" + currentMonthlyPayment.toFixed(2) + "";
totalInterestPaidCurrentDisplay.textContent = "Total Interest Paid on Current Loan: $" + totalInterestPaidCurrent.toFixed(2);
// Display new loan details
newMonthlyPaymentDisplay.innerHTML = "New Estimated Monthly Payment: $" + newMonthlyPayment.toFixed(2) + "";
totalInterestPaidNewDisplay.textContent = "Total Interest Paid on New Loan: $" + totalInterestPaidNew.toFixed(2);
// Calculate and display differences and savings
var paymentDifference = currentMonthlyPayment – newMonthlyPayment;
var interestSavings = totalInterestPaidCurrent – totalInterestPaidNew;
if (paymentDifference > 0) {
monthlyPaymentDifference.textContent = "Potential Monthly Savings: $" + paymentDifference.toFixed(2);
} else if (paymentDifference 0) {
totalInterestSavingsDisplay.textContent = "Estimated Total Interest Savings: $" + interestSavings.toFixed(2);
} else if (interestSavings < 0) {
totalInterestSavingsDisplay.textContent = "Estimated Additional Interest Cost: $" + Math.abs(interestSavings).toFixed(2);
} else {
totalInterestSavingsDisplay.textContent = "Total interest paid remains the same.";
}
// Check for savings and display message if not saving money
if (paymentDifference <= 0 && interestSavings <= 0) {
noSavingsMessage.style.display = 'block';
totalInterestSavingsDisplay.textContent = ""; // Clear savings if no net gain
}
}