Auto Refinance Calculator

Refinancing your auto loan is essentially replacing it with another loan, which can allow you to pay less interest over time or lower your monthly payments. If you think you can get a better loan — for example, if your credit score has improved — refinancing your loan can save you money.

When you should refinance an auto loan

• Your credit score has improved. In general, the main reason to refinance your auto is if you qualify for a better interest rate, which happens when you have better credit. If your credit score has gone up by 30 points or more, it’s worth looking into refinancing your auto loan.
• You financed at the dealership. Dealer’s lenders typically don’t have the best interest rates, so shopping around for a new loan could save you money. Our Dealer vs. Bank Financing Calculator helps you compare which institution it’s better to finance through.
• Interest rates have gone down. Interest rates are variable and fluctuate with economic conditions. If interest rates have gone down since you purchased the car, you could save by refinancing. (Note: unfortunately, interest rates are higher right now than they have been in the past).
• You want to lower your monthly car payments. If your financial circumstances have changed and you’re struggling to keep up with your monthly car payments, refinancing your loan can lower your monthly payments and give you some breathing room in your budget. Keep in mind that the longer your loan term, the more you’ll pay in interest.

When you shouldn’t refinance an auto loan

• Refinancing will put you “under water.” If you extend your loan term too long, you risk ending up with negative equity or “under water” on your loan, meaning you owe more on the car than it’s worth.
• You owe too much or too little on your current loan. If you’re nearly done paying off your car, it probably doesn’t make sense to refinance your loan (instead, you can save by paying off your loan more quickly). On the other hand, if you currently owe more than your vehicle is worth (negative equity), you likely won’t get a good deal refinancing.
• You’ll pay a price in penalties and fees. Review your existing loan agreement for prepayment penalties or fees. Additionally, ask the new lender about fees associated with the refinancing, such as application fees or closing costs. If the fees are more than or similar to what you’ll save, it probably isn’t worth refinancing.

Refinancing a loan is similar to initially applying for a car loan, though the new lender may have some additional requirements specific to refinancing. For example:

• Your current loan is at least six months old
• You’ve made payments on time
• Your vehicle is less than 10 years older and has fewer than 100,000 to 150,000 miles
• The ratio of your loan to the car’s value is no more than 125 or 150 percent
• You have at least two years and $5,000 remaining on your current loan

1. Review the status of your finances and current loan. Check your credit score, the current value of your car (Kelley Blue Book offers a free tool), and your current loan terms to see how much you could save by refinancing.
2. Shop around with refinancing lenders. To find the best auto loan, shop around with a few lenders — including your current lender if it offers refinancing — to compare rates, deals, and fees. You can usually leverage your options to negotiate a better offer from your preferred lender.
3. Gather your documents. To apply for refinancing, you’ll need proof of income (such as pay stubs or W-2), proof of address, and proof insurance. You’ll also need information on your vehicle, such as make, model, trim, VIN, and mileage.
4. Submit an application and finalize your loan. When you apply, the lender will appraise your car and run a hard inquiry on your credit. Once the loan is finalized, your new lender will pay off the loan balance from the old lender, and you’ll start making your new monthly payments. The refinancing process takes anywhere from less than a day to a couple weeks.