You may be paying too much for your car payment each month. It might have improved since your last credit report. When you bought your car, you might have thought that your dealer had marked up your interest rate. The choice to refinance car loan may save you money on interest or reduce your monthly payments, depending on the terms of your original loan or changes in your finances.
Gather key information
For this calculator to work most effectively, you will need a few details about your current loan. A recent loan statement will provide you with this information; if not, contact your lender. In all other cases, estimate the information to get a quick estimate of the results.
Total amount borrowed: The amount you borrowed in total. In the case of a new car you recently purchased, the down payment is the difference between the car’s purchase price and the amount put down.
The rate you were eligible for when you first applied for the loan. It’s possible to be paying a higher rate than you should if you financed your car through a dealer. That usually occurs to people with below-average credit or to those who have not been preapproved for a loan, mostly because they are unaware of better rates available.
Current loan length:
You began paying off the loan after a certain number of months had passed. The average new car loan lasts 60 months.
Currently, the loan balance is:
The payments you make each month should have been on time. If you have had the loan for more than a year, you should have a balance that is lower than the amount borrowed. You can find out your remaining loan balance by looking at your latest statement or by calling your lender.
Amount of time left on current loan:
You can view the remaining loan term here. Unless you have been paying on time for six to 12 months, refinancing car loan at a better rate is difficult. You can save more money by refinancing if you have a long time left on your loan.
Refinanced loan amount: If you don’t know how much you still owe, look at your latest statement or call your lender and ask for the “buyout amount.” You may owe more than your car is worth; most lenders will refinance amounts greater than a car’s book value.
The new loan term is:
The option to refinance car loan gives the flexibility of time to pay off the loan. Choose fewer months than are left on your current loan if you want to pay it off quicker. In this way, the interest on your loan will be lower. A six- or more-month loan extension will lower your monthly payments if you are willing to pay more interest. Extending your loan should be done with caution since cars depreciate quickly, and you might end up owing more than you have.