How To Use This Car Refinance Calculator
The calculator updates as you type, so you can test several offers in a few seconds.
- Enter your current loan. You'll find the balance owing, the interest rate and the number of payments left on your latest statement or in your lender's app.
- Enter the new rate. Use the rate a lender has offered you, or try a few rates to see how low you'd need to go for refinancing to pay off.
- Pick the new term. Choose from 12 to 96 months. Picking the same number of months you have left gives you the cleanest comparison.
- Add any fees. Include the new lender's fees, the lien registration and any penalty your current lender charges to pay the loan off early. They're added to the new loan. Leave the field empty if there are none.
- Review your estimate. You'll see your new payment next to your current one, what you save each month, in interest and in total. The tables under the calculator put both loans side by side and compare other terms at the same new rate.
If the numbers work, use the "See if you qualify" button to compare car financing options. It won't affect your credit score.
How The Savings Are Calculated
The calculator works out both loans the same way, with equal monthly payments, so you compare them on the same footing:
- Current payment = B × r × (1 + r)n ÷ ((1 + r)n - 1), where B is the balance owing, r is your current annual rate divided by 12, and n is the number of months left.
- New payment = the same formula, with the balance plus fees, the new rate and the new term.
- Monthly savings = current payment - new payment.
- Total savings = everything left to pay on your current loan - everything you'd pay on the new one, fees included.
Example: Refinancing $20,000 owing at 12% with 48 months left to 7% over 48 months lowers your payment from $526.68 to $478.92 a month, saving $47.76 a month and $2,292.09 in total. The interest left to pay drops from $5,280.48 to $2,988.39.
How Much A Lower Rate Saves You
Every point you take off your rate lowers your payment, and the savings add up over the months you have left. Here's a $20,000 balance at 12% with 48 months left, refinanced over the same 48 months with no fees:
| New rate | New payment | Monthly savings | Total savings |
|---|---|---|---|
| 5% | $460.59 | $66.09 | $3,172.36 |
| 7% | $478.92 | $47.76 | $2,292.09 |
| 9% | $497.70 | $28.98 | $1,390.84 |
| 10% | $507.25 | $19.43 | $932.40 |
| 11% | $516.91 | $9.77 | $468.78 |
The bigger your balance and the more months you have left, the more a lower rate is worth. Near the end of a loan, most of what you still owe is principal, so a new rate has less to work on.
A Lower Payment Isn't Always A Saving
Stretching the term is the easiest way to cut your payment, and the easiest way to pay more overall. Here's the same $20,000 at 12% with 48 months left, refinanced at 7% over different terms:
| New term | New payment | Monthly savings | Total savings |
|---|---|---|---|
| 36 months | $617.54 | -$90.86 | $3,048.97 |
| 48 months | $478.92 | $47.76 | $2,292.09 |
| 60 months | $396.02 | $130.66 | $1,519.04 |
| 72 months | $340.98 | $185.70 | $729.91 |
| 84 months | $301.85 | $224.83 | -$75.22 |
Over 84 months the payment drops by $224.83, but you'd pay $75.22 more in total, even at a rate 5 points lower, and you'd still be paying for the car three years after your current loan would have ended. Going the other way, a shorter term raises the payment but saves the most. A longer term also means you're more likely to owe more than the car is worth for longer, which makes it harder to sell or trade in. See what negative equity is.
Fees Can Cancel Out A Small Rate Drop
Refinancing isn't always free. The new lender may charge an administration fee, there's usually a fee to register the new lien on your car, and some lenders charge a penalty for paying a loan off early. Ask your current lender for a payout quote before you decide.
- A big rate drop absorbs fees. Refinancing the $20,000 example from 12% to 7% with $500 in fees still saves $35.78 a month and $1,717.38 in total.
- A small one doesn't. From 12% to 11% with the same $500 in fees, the payment goes up to $529.83 and you'd pay $151.51 more in total.
When Refinancing Your Car Makes Sense
- Your credit has improved. If you financed with a low score and have made your payments on time since, you may now qualify for a much better rate.
- You took dealer financing without shopping around. The rate arranged at the dealership isn't always the best one you could get.
- You have a good part of the loan left. The savings come from the interest you haven't paid yet, so refinancing early in the loan is worth more. See how soon you can refinance a car loan.
- You need a lower payment. A longer term can ease your budget, as long as you know what it costs in total. The calculator shows both.
It usually doesn't make sense when you only have a few payments left, when fees and penalties eat the savings, or when you owe much more than the car is worth, since many lenders won't refinance an underwater loan. If refinancing isn't for you, there are other ways to lower your car payments, and you can weigh refinancing against trading in your car. For the full process, read our guide to refinancing a car loan in Canada. Buying a different car instead? Use our car loan calculator.