Reference formulas and worked examples below keep their stated units. Monetary examples use USD; dimensional examples use US customary units unless labeled otherwise. Metric calculator inputs are converted to these reference units before calculation. Choosing another currency does not convert example amounts or exchange money.
How to use this auto refinance calculator
Start from the balance you owe today. Compare the remaining original loan with a new fixed-rate loan, and choose a holding period to compare both at the same point in time.
How the calculation works
Recalculate the current remaining loan from today’s balance, remaining monthly term, and current interest rate. Model the new loan using the same balance plus any financed fees. Cash-paid fees are counted at month 0.
For principal P, monthly rate r, and n payments, scheduled payment = P × r ÷ [1 − (1 + r)^(−n)]. At a zero rate, use P ÷ n. Monthly interest is rounded to cents; the final payment clears the remainder.
Full-term savings = remaining original payments − new-loan payments − cash fees. A smaller monthly payment alone does not establish savings.
At holding month h, compare cumulative cash already paid + remaining loan balance for each option. The new side includes cash fees, and financed fees are already in its principal. This treats the remaining balance as an obligation rather than free savings.
Lasting cost break-even is the earliest month when this cash-plus-debt comparison is nonnegative and stays nonnegative through both scheduled payoffs. An early advantage that later disappears is not reported as lasting break-even. Time value of money is not modeled.
Worked example
Suppose 12,000 remains at 0% for 12 months: the payment is 1,000. Refinancing at 0% for 24 months lowers it to 500, but 120 in cash fees makes the total 12,120 instead of 12,000. At month 12, the new loan has 6,000 still owed; its 6,000 paid + 6,000 balance + 120 fee is still 120 more expensive. There is no cost break-even.
Limits and assumptions
Fixed nominal annual interest divided by 12, with monthly end-of-period payments and cent rounding. This does not calculate APR, daily interest, variable rates, or Canadian semiannual mortgage compounding. A currency choice does not change lending rules. Original payments are reconstructed from balance and remaining term, so a lender using another schedule may differ. Include known fees and penalties yourself. No cash-out, missed payments, additional principal payments, vehicle depreciation, tax effects, future rate changes, or investment return on payment differences is modeled.
Frequently asked questions
Can a lower monthly payment cost more overall?
Yes. Extending the term can reduce each payment while increasing the remaining interest. Compare full-term cost and the cash-plus-debt figure at your selected holding month.
Why include remaining debt in a short holding period?
Otherwise a longer loan appears to save money just because less principal has been repaid. The balance still has to be settled or carried after the comparison date.
Is break-even simply fees divided by monthly savings?
No. That shortcut ignores different principal repayment speeds. This tool tracks paid cash and remaining debt month by month, and reports only a crossover that stays favorable through both modeled payoffs.
Where do I enter prepayment penalties?
Include a known penalty in total refinancing fees, and choose whether the fees are paid now or financed. The tool does not infer contract penalties.
What if I already make extra payments?
This version compares scheduled remaining loans. Extra or irregular future payments need a different cash-flow scenario; they are not assumed here.