Practical decision guide
Compare refinancing with paying extra on your current car loan
A lower monthly payment does not show the whole cost of refinancing. Compare the fees, interest rate, new term, remaining balance, and what happens when both accelerated options use the same monthly budget.
How to use this tool
Use the remaining loan
Enter today’s principal and remaining payments, not the original purchase price and term.
Enter a written quote
Use the contract interest rate and itemized fees, including any prepayment penalty.
Set one monthly budget
Enter the extra amount you can sustain. Both accelerated strategies use the current required payment plus this amount.
Compare your time horizon
Review payoff month, selected-horizon balance, interest and fees, and lasting break-even.
Example: a 9% loan refinanced to 6%
With $20,000 remaining over 36 months, the payment at 9% is about $635.99. Refinancing at 6% for the same 36 months gives $608.44. With $300 paid upfront, modeled total savings are about $692 and lasting cost break-even occurs in month 7.
Example: a lower payment can cost more
With $20,000 remaining, 12 months to go and a 6% rate, the payment is about $1,721.33. A new 60-month loan at the same 6% rate reduces it to $386.66, but adds about $2,543 in interest even with no fees. The payment relief is real; so is the longer debt commitment.
Why balance matters before payoff
Adding up smaller payments alone can overstate savings when the new loan pays principal more slowly. This comparison includes remaining debt at the selected month, which prevents deferred principal from appearing as savings.
Example: refinance or keep paying $100 extra
With the default loan, the current required payment is about $636. Adding $100 creates a monthly budget of about $736. Keep plus extra and refinance plus the same budget both use that amount, so the table can compare payoff dates and interest plus fees without giving either option more monthly cash.
If the refinance minimum is lower, continuing the same $736 budget directs the difference to principal. The equal-budget break-even identifies the month when those savings become positive and stay positive.
Planning estimate from your entered quote; the calculator does not estimate approval, available rates, or lender-specific daily payoff amounts.
Sources and further reading
Frequently asked questions
Should I refinance or just pay extra?
Compare keep plus extra with refinance plus the same monthly budget. Review both the cost at your expected horizon and lifetime interest plus fees.
Does a lower APR guarantee refinancing saves money?
No. Fees, a longer term, and how soon you repay can offset a lower rate. Use the interest rate for amortization and enter fees separately.
Can I finance the closing costs?
The calculator supports adding the entered costs to the new loan. Whether a lender permits that depends on the quote and its lending limits.
Why is break-even different from fees divided by payment savings?
Payment savings include changes in principal repayment. The break-even shown here compares interest and fees and checks that savings persist through both loan payoffs.
Will this match my lender’s payoff quote?
Not exactly. Daily interest, payment dates, accrued charges, credit approval and lender rounding can differ from the monthly model. Confirm the written payoff amount and new loan disclosures.