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Auto Loan Refinance Calculator
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Auto sales is the biggest retail vertical of our economy and more than 100,000,000 Americans have an auto loan.
Your car is likely your second biggest purchase in life, yet buying a car remains a nervewracking experience with lots of potential pitfalls. Your vehicle loan can be one of those pitfalls:

How do you know your current interest rate is the best rate and you are not paying too much?

Maybe you can get an auto loan at a lower interest rate, which can save you a big amount of money?
The truth is: you are overpaying on your monthly payments.
79% of car shoppers get their loan at the dealership
79% of car shoppers get their vehicle loan at the dealership  that's true for new cars and used cars  and the dealer won't give you the rate that's best for you. The dealer instead will give you the loan that pays him the highest referral fee. As a result, auto loan rates are all over the map and significantly higher than they should and need to be.
We don't believe that people will shop cars differently any time soon. 79% of car shoppers will continue to rely on the dealer for financing. Therefore, the most effective way to address the problem, lower your rate and save you money is to refinance your auto loan after you left the dealership. We created an auto refinance calculator to calculate your monthly payment reduction over the life of your loan and to guide you through the process.
Contrary to the dealership experience, we won't put you on the spot and force you to make a quick decision. Instead, we want to give our clients time and space to explore by how much they could reduce their monthly payments through refinancing their car loan.
We performed a study on the best way to lower your rate on your car loan. In theory, the higher your credit score, the lower your rate should be. Since reality fails this theory, we're going to shed some light on how exactly refinancing your auto loan works, how you can save money and answer some commonly asked questions in the following.
Analyze your current car loan and your monthly payments
Auto loans are not straightforward to understand. Before looking into how refinancing would lower your monthly payments, let's spend a minute understanding your current loan. We found that using an examples and visuals help illustrate the nuances of your car loan.
Let's assume you bought a car for $28,000. The outthedoor price of your vehicle will therefore be around 10% more, i.e. around $30,800. Let's further assume the interest rate on your loan is 15%, which would mean your credit score is between 600  700. Lastly, let's assume you put $0 down and chose a 5 year term (i.e. 60 months).
The following chart shows a few interesting things:

The purple line is your loan amount and loan balance starting at $30,800 and going to $0 after the fifth year.

The gray line is your vehicle value starting at $28,000 and decreasing over time. In the first 12 years, your vehicle loses value quicker than later on.

The day you bought your car, you already owed more than your car was worth. We call that negative equity and the primary driver behind your negative equity on the day you bought your car is the difference between the vehicle price and the outthedoor price.

In the first 12 years, your vehicle value goes down quicker than your loan balance. Therefore, you will have negative equity until year 2.5.

After 2.5 years, it looks like your outstanding loan balance is lower than your vehicle value, which means you have positive equity in your car  its the same concept as home equity.

At an 15% annual percentage rate (APR), $0 down and a term of 60 months, your monthly car payments for your $30,800 loan are $733.

If you do the math and multiply the monthly payment of $733 times 60 months, you'll realize that you pay a total of $43,964 (i.e. $ amount time payments) until you fully paid off your car.

Since your car initially 'only' cost $30,800, you will realize that you paid a total of $13,164 as interest expense to the lender over the life of your loan. That's how the lender makes his money!
$13,164 total interest expense is a big amount of money and seems wildly high! Therefore, let's have a closer look at your monthly payments to better understand where all the money goes and how much your monthly savings could be. The chart below zooms into the first 5 years of the above chart:

In yellow, you will see how much of your monthly payments goes towards paying off the loan (use the right axis for the $ value reference).

In red, you will see how much of your monthly payments goes towards paying interest to the lender for lending you the $30,800 (use the right axis for the $ value reference).
Auto loans are annuities, i.e. every monthly payment is the exact the same  here $733 over 60 months. As you can see on the chart, only about half of your monthly payments in the first year go towards paying down your vehicle loan balance. The other half of what you're paying every month are interest payments.
Let's summarize what we found and what our takeaways are from the above analysis:

The higher your outthedoor price, the bigger your negative equity in the first couple of years of your loan.

At an 15% annual percentage rate (APR) and a 60 months term, about half of your monthly payments of the first year are interest payments to the lender and don't go towards paying down the loan balance.

As a result, the total interest payments sum up to a staggering $13,164 over the course of the loan.
How high would monthly payments be if the interest rate was 25%
Total interest payments of a 15% loan over 60 months seemed incredibly high. Meanwhile, 15% isn't even the worst rate we see. In the U.S., auto loans can have rates as high as 30%.
Therefore, let's have a look at the same car purchase as above but assume 25% APR on your auto loan instead of 15%, which would mean your credit score is between 500  600.
The purple line is your loan balance again starting at $30,800 and going to $0 after the fifth year. As a comparison, the dotted purple line is the loan balance from the previous example. On first sight, the difference doesn't look so stark when comparing the solid purple line to the dotted purple line. However, once you dig a little deeper you will notice how much worse a rate of 25% is than a 15% APR:

The 25% APR loan needs at least 6 months longer to get to positive equity.

That means, only after 3 years your outstanding loan balance is lower than your vehicle value, which would get you to positive equity in your car.

At 25%, $0 down and a term of 60 months, your monthly car payments for your $30,800 loan equal $904.

If you do the math and multiply the monthly payment of $904 times 60 months, you'll realize that you pay a total of $52,241 (i.e. $ amount time payments) until you fully paid off your car.

Since your car initially 'only' cost $30,800, you will realize that you will pay a total of $23,441 as interest expense to the lender over the life of your loan. We thought the interest expense on a 15% APR loan was high, the interest expense on a 25% loan is almost as much as the entire car!
Where the heck does all this money go? As we did earlier, the chart below zooms into the first 5 years of your loan.

In yellow, you will see how much of your monthly payments goes towards paying off the loan (use the right axis for the $ value reference).

In red, you will see how much of your monthly payments goes towards paying interest to the lender for lending you the $30,800 (use the right axis for the $ value reference).

Quick reminder: auto loans are annuities, i.e. every monthly payment is the exact the same  here $904 over 60 months.

As you can see from the chart below, on a 25% APR loan only about a quarter of your monthly payments in the first year go towards paying down your loan balance.

Three quarters of what you're paying every month are interest payments.

Even after making payments for 2 years (i.e. 24 months x $904 = $21,696), you still owe about half of your loan.
How do you refinance an auto loan?
No wonder you feel stuck or frustrated! The obvious question you will be asking yourself is how do you refinance an auto loan. The best way to make progress and say goodbye to high monthly payments are the following two steps:

reduce your outthedoor price by canceling unnecessary protection products.

refinance your auto loan when you improved your credit score to lower your rate and monthly payments.
On the chart below, the borrower decided to refinance her car when her outstanding loan balance was approximately the same as her vehicle value. That means the loan balance was starting to be lower than the vehicle value, i.e. she started having positive equity, after 2.5 years:

At that point in time, her loan amount and loan balance is $18,051.

With improved credit, the car owner now qualified for a rate of 9%, significantly below the initial 15%.

When refinancing the remaining balance (i.e. the refinance loan) of $18,051 at 9% over a term of 60 months (5 years), the monthly car payment will go down to $375.

If you do the math and multiply the new monthly payment of $375 times 60 months, you'll realize that you pay a total of $22,500 until you fully paid off your car.

Since the outstanding loan balance prior to refinancing the car was $18,051, you will realize that you will pay a total of $4,440 as interest expense to the refinance lender.

Those $4,440 are much more moderate than the $13,164 you were going to pay to the original lender had you not refinanced your auto loan. You are literally saving multiple thousands of dollars.
Much better! Still worthwhile looking into where all the money goes, right?

The following chart zooms into the 7.5 years of the above chart, i.e. the total term of the original plus the refinanced loan.

You can see how the monthly payments go down drastically when you refinance.

Granted, two things are having an effect here: (i) you have a much lower rate now 9% down from 15% and (ii) your loan term went to 30 months (2.5 years) on the original loan plus another 60 months (5 years) on the refinanced loan.

That means, in total you'll be making payments for 7.5 years now.
What would the payments look like if you start out at 25% and then refinance?

As you can see on the chart below, the refinancing happens when the outstanding loan balance of the first loan is still a couple of thousand dollars above the vehicle value.

That means the car owner still has negative equity. While not impossible, negative equity makes it harder to refinance since the auto refinance company will be taking a risk.

The good news, the new loan has a significantly lower monthly car payment at $469 compared to the original $904.

If you do the math and multiply the new monthly payment (i.e. of the refinance loan) of $469 times 60 months, you'll realize that you pay a total of $28,140 until you fully paid off your car.

Since the outstanding loan balance prior to refinancing the car was $19,696, you will realize that you will pay a total of $8,444 as interest expense to the refinance lender.

$8,444 is still a lot! However, much more moderate than the $23,441 you were going to pay to the original lender at 25% had you not refinanced your auto loan.
Again, let's have look where all the money goes:

You can see how the monthly payments go down drastically when you refinance in the third year.

Granted, two things are having an effect here: (i) you have a much lower rate now 15% down from 25% and (ii) your loan term went to 30 months (2.5 years) on the original loan plus another 60 months (5 years) on the refinanced loan.

That means, in total you'll be making payments for 7.5 years.
Lot's to digest. Feel free to reach out to us if you have any questions or want clarification.
Are there different forms of auto refinancing?
Every refinancing is slightly different and car owners have different motivations for refinancing their auto loans. We support four different forms of refinancing:

Classical refinancing

Renew loan refinancing

New loan refinancing

Cash out refinancing
The examples illustrated above are classical refinancing, i.e. a borrower replaces an existing loan with a new loan and better terms. Improving your credit score is the primary driver enabling you to do classical refinancing.
Renew loan finance and new loan finance are almost identical to classical refinance. The only difference is:

the car owner has positive equity before refinancing and wants to up her loan balance

the car owner owns the vehicle outright and doesn't have an existing loan.
What if you want to get some cash out through refinancing?
With each of the forms of refinancing, the borrower does not get any immediate cash out of the deal but a lower annual percentage rate and lower monthly payments. What if your main motivation for refinancing is to get some immediate cash?
The difference of cash out refinancing is that your new loan starts off of a higher balance than you owed on your previous loan. Usually, cash out refinancing pushes a loan into negative equity, which means two things:

The refinancing company is running a bigger risk.

Consequently, the refinancing company will charge a higher rate for cash out refinancing than for classical refinancing.
In sum, refinancing can be a good source of cash should you want to make a bigger purchase but don't want to put the expenses on your credit card.
Lot's of theory and numbers? That's the nature of the beast and don't worry, we've got you covered. In the following, we're going to answer some commonly asked questions. If your questions remain unanswered, feel free to reach out to us at any time
When should you refinance your car?
While a little academic, I'm hopeful the above analyses and examples provided some clarity around the nuances of refinancing. Based on what we discussed above, you might be asking yourself: when should you refinance you car?
We have three thoughts:

The moment you turn from negative to positive equity is the time when auto loan companies will be most excited about refinancing. Now, your car is worth more than the outstanding loan balance and the risk for the lender low. You can cancel your GAP insurance policy too and get reimbursed pro rata.

You still have negative equity? No problem. You should be able to refinance your auto loan even if you have negative equity and owe up to 125% of what the car is worth. This metric is called loan to value (LTV) and is a metric lenders care a lot about. The lower your LTV, the lower your rate will be.

Ultimately, the decision to refinance your auto loan should be based on your potential savings. Independent of your LTV, the metric you care about is APR. Can you lower your APR? Go refinance now! You can even refinance your car multiple times if you own it long enough. People with mortgages do it all the time!
In sum, continuously check what rate you qualify for to make sure you don't miss a good opportunity. If you sign up with us, we will keep you posted on your credit score improvement and let you know proactively when you will qualify for refinancing.
Which bank is best for refinance?
Wondering which bank is best for refinance? In the U.S. alone, we count tens of thousands of auto loan companies and finding the right bank to refinance is a challenge. Why is the market so fragmented? We found three reasons why you struggle to easily determine the best bank to refinance:

Your current bank doesn't actually want you to refinance your auto loan! When you refinance, you reduce the profit your current auto loan company makes on your loan. Therefore, the bank would in fact prefer for you to not refinance and won't tell you proactively if/when you do qualify.

Consequently, the best bank for you to refinance is not your own bank. Instead, you need to find an independent lender focused on refinancing. Finding an independent lender who will allow you to go through the whole process online, however, will be challenging. Most auto lenders are oldschool and require you to visit a branch.

Most bigger banks won't offer you refinancing for yet another reason: banks get their business from car dealers. Remember? 79% of all car shoppers get their loan at the dealership. If a bank refinances a car owner, the bank reduces its own and the dealer's profit! In other words, if a bank proactively reaches out to you to refinance, they all of a sudden compete with car dealerships and risk the relationship with their best business referral partners.
In sum, your best chance at refinancing your auto loan will be with an auto loan company like us that doesn't originate its loans at car dealerships. We are fully independent, don't receive or pay referral fees from or to third parties and care most about about providing you a great experience. The devil is in the detail and we're here to help.
Is refinancing your car bad for your credit?
A number of Americans with challenged credit are working on improving their personal finances. Continuously checking your credit history can reflect poorly on your credit report and may hurt your credit score (e.g. Fico). Naturally you would ask yourself: is refinancing your car bad for your credit?
In short, refinancing is not bad for your credit. Let's provide some context:

The behavior that hurts your credit is every 'hard credit pull' on your credit history. That means, a lender checks your credit file and leaves an inquiry note visible to other financial institutions. The reason for the hard inquiry is to inform other lenders about your recent credit inquiries so they can better assess your risk profile.

Opposite to a hard credit pull, the credit bureaus allow auto loan companies to do a 'soft credit pull'. A soft credit pull provides a lender with the exact same information from your credit file. However, the soft credit pull does not leave a trace on your credit record and therefore doesn't impact your credit score.
Hence, for as long as the refinancing companies you're working with only perform a soft credit pull, your credit will not be impacted. Quite the contrary, there are no prepayment penalties and after your successful refinancing, your APR and the interest cost will be lower and you will be paying down the principal of your loan quicker.
Making regular payments and paying off your loan quicker are behaviors the credit bureaus appreciate and reward with a higher score. Therefore, refinancing your car is not bad for your credit at all and you should do a soft credit pull right now to find out if you qualify. It's good for your wallet and significantly improves your score over time!
What are current auto refinance rates?
Current auto loan rates heavily depend on four pieces of information:

What's your credit score?

What's the LTV of your loan?

What's the term of your loan?

How much do you want to cashout?
Making assumptions for these parameters, what are current auto refinancing rates? The following table gives you general guidance
However, we highly recommend taking a look at our auto refinance calculator, which allows you to adjust your credit score, LTV, term and cashout. You will be able to calculate your exact rate and monthly payment reduction, guaranteed by us.
How to refinance your auto loan and save thousands of dollars?
In the above study, we explained how auto loan refinancing works and provided some concrete examples. We appreciate that financial topics and jargon can be confusing and intimidating. Therefore, we built the auto loan calculator above so you can calculate yourself how much lower monthly payments you'd be paying if you were to refinance your auto loan.
Please feel free to reach out to us if you have any questions or are interested in refinancing your auto loan. You can save thousands of dollars with just a few clicks.
WithClutch.com is a fully digital platform that lets car owners like you do so from the comfort of their own home. No need to set a foot in a bank or credit union. You can lower your rate or get cash in as little as 20 seconds.
Follow three simple steps to refinance your auto loan, get approved in seconds and save thousands in minutes.