How this number is made
Refinancing a car replaces the remaining balance with a new note. A lower rate at the same months cuts interest. A longer term can cut the payment and still raise the interest. This page shows both. Fees to originate the new loan are not subtracted from the savings. Title and the lender’s refusal to finance an old car are outside the math.
- Months left are what the current lender says, not the original term.
- If the new loan has a fee added to the balance, add it to the balance first.
Formula
Old interest is the interest still due on the balance over the months left. New interest is the interest on a new installment of the new length. Payment change is the new payment minus the old payment.
Worked example
With the figures already in the form, new monthly payment is $422.73.
Questions
Should I extend the term to lower the payment?
Only with your eyes open. Look at the interest row. A smaller payment can cost more in total.
Is the new rate worth a fee?
Subtract the fee from the interest saved. If nothing is left, the fee ate the savings.