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How refinancing saves money
A refinance pays off your loan with a new one. If the new rate is lower, more of each payment goes to the balance. The calculator compares the interest left on your current loan with the interest on the new one, after any fees.
A worked example
You owe $20,000 with 48 months left at 11%. Refinancing at 7% for 48 months, with $200 in fees rolled into the new loan:
- Current payment: $516.91, new payment: $483.71
- You save about $1,593 over the loan, fees included
When refinancing makes sense
- Your credit score went up since you bought.
- Rates dropped, or the dealer's loan had a marked-up rate.
- You want a shorter term to pay it off sooner.
Stretching the term lowers the payment but can cost more in total. The calculator shows both.