Compare your current car loan payment to a refinanced one to see your monthly and total savings.
Refinancing replaces your current auto loan with a new one, ideally at a lower interest rate, which can shrink your monthly payment and reduce total interest paid over the life of the loan.
Monthly Payment = Balance × r ÷ (1 - (1 + r)^-n), where r is the monthly rate and n is the number of months.
Refinancing an $18,000 balance from 8.5% to 5.9% over the same 48-month term can save meaningful money both monthly and over the life of the loan.
You take out a new loan (ideally at a lower interest rate) to pay off your existing auto loan, potentially lowering your monthly payment or total interest.
It compares your remaining payments and interest under your current loan versus the new loan terms to show the difference in monthly payment and total interest.
Typically when interest rates have dropped, your credit score has improved since the original loan, or you want to change the loan term.