Auto Loan Refinance Break-Even Calculator

See whether refinancing your car loan pays off: compare payments, monthly savings, and the month you recoup any refinancing fees.

Inputs

Remaining principal on your existing loan.

APR on your current loan.

Remaining term of the current loan.

APR offered on the refinance.

Term of the new (refinanced) loan.

Title, application, and other one-time costs.

Result

Break-even point
11.0 months
save $27.34/mo · fees $300.00
  • Current payment$478.92/mo
  • New payment$451.58/mo
  • Monthly savings$27.34/mo
  • Break-even on fees11.0 months
  • Total interest — current$2,988.39
  • Total interest — refinance (incl. fees)$1,975.89
  • Lifetime savings$1,012.50
Source: Monthly payment = P·r(1+r)ⁿ/((1+r)ⁿ−1). Break-even months = fees ÷ monthly savings.
Not financial advice — Compares monthly payment and lifetime interest. Extending the term lowers the payment but can raise total interest even at a lower rate — check the total-interest figures, not just the payment.

Step-by-step

  1. Current payment on $20,000.00 at 7% over 48 mo = $478.92.
  2. New payment at 4% over 48 mo = $451.58; monthly savings $27.34.
  3. Break-even = fees ÷ savings = $300.00 ÷ $27.34 = 11.0 months.

How to use this calculator

  • Enter your current loan balance, rate, and months remaining.
  • Enter the new loan’s rate and term, plus any refinancing fees.
  • Read the monthly savings and the break-even month.
  • Compare total interest to ensure a lower payment is not costing more overall.

About this calculator

Refinancing a car loan replaces your current loan with a new one — ideally at a lower rate — but it often carries fees, so it only pays off if you keep the car long enough to recoup them. This calculator computes your current monthly payment and the new payment, the monthly savings between them, and the break-even month where cumulative savings cover the refinancing fees. It also compares total interest over each loan’s life so you can spot a common trap: stretching the term lowers the monthly payment but can increase the total interest you pay, even at a lower rate. Look at both the monthly savings and the lifetime-interest figures before deciding. Refinancing makes the most sense when your credit has improved, rates have dropped, and you will hold the loan past the break-even point.

How it works — the formula

Payment = Balance · r(1+r)ⁿ / ((1+r)ⁿ − 1) (r = monthly rate) Monthly savings = Old payment − New payment Break-even months = Fees ÷ Monthly savings

Both loans are amortized; the payment gap funds the fees, and total-interest comparison guards against term-stretching traps.

Source: CFPB — Auto Loans

Worked examples

Example 1
$20k, 7%→4%, 48→48 mo, $300 fees
Inputs:
balance=20000, oldRate=7, oldMonths=48, newRate=4, newMonths=48, fees=300
Output:
save $27.34/mo, break-even ~11 months
Example 2
$15k, 9%→5%, 36→48 mo, $250 fees
Inputs:
balance=15000, oldRate=9, oldMonths=36, newRate=5, newMonths=48
Output:
lower payment but check total interest (longer term)
Example 3
$25k, 6%→6%, no change
Inputs:
balance=25000, oldRate=6, oldMonths=60, newRate=6, newMonths=60
Output:
no savings

Limitations

  • Compares principal & interest only; ignores taxes and insurance.
  • Assumes fees paid upfront, not rolled into the loan.
  • Does not model prepayment penalties unless added to fees.

Decision-support estimate; confirm exact rates and fees with the lender.

Frequently asked

Compare the new monthly payment to the current one and divide the fees by the monthly savings to find the break-even month. If you will keep the car (and loan) past that point, refinancing saves money — provided the total interest does not rise.

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