A lower rate doesn't automatically mean a better deal. See your real monthly savings, total interest difference, and how long it takes to break even on any refinance fees.
Current loan
New loan offer
Keep current loan
$552.71/mo
Remaining interest: $4,530.08
Refinance
$521.73/mo
Total interest: $3,043.04
You'd save
$30.98/mo
$1,487.04 less total interest
Break-even on the $200.00 in fees: 7 months
Refinancing resets the clock on interest calculated against whatever term you choose. A new loan at a lower rate but a longer term can lower your payment while still costing more in total interest than just finishing your current loan -- especially if you're several years into it already, since auto loans are front-loaded with interest and much of that cost is already behind you. This tool compares both numbers side by side so a lower payment doesn't look like savings it isn't.
When does it make sense to refinance a car loan?
Generally when your credit has improved since you got the original loan, rates have dropped, or you want to change your term length -- and the new APR is enough lower that the monthly (and often total-interest) savings clearly outweigh any refinance fees. This calculator shows both numbers for your specific situation.
What is the break-even point on a refinance?
The number of months of monthly savings it takes to recoup any fees charged to refinance. If you plan to keep the car (and the loan) longer than the break-even point, refinancing is a net win on top of the fees; if you're likely to sell or pay it off sooner, it might not be worth it.
Can refinancing to a lower payment cost more overall?
Yes -- if the new loan resets or extends the term, a lower monthly payment can still mean paying more total interest than finishing out the current loan, especially if you're refinancing late in the original term when most of the interest is already behind you. Always check total interest, not just the payment.
Does refinancing hurt my credit score?
Applying triggers a hard credit inquiry, which can cause a small, temporary dip. Shopping multiple lenders within a short window (typically 14-45 days depending on the scoring model) is usually treated as a single inquiry for rate-shopping purposes.
Can I refinance if I'm underwater on my loan?
It's harder, since lenders are financing more than the car is worth, but some lenders do offer it, often at a less favorable rate. Rolling negative equity into a refinance extends how long you'd stay underwater -- see the trade-in negative equity handling on the homepage calculator for how that's modeled in a purchase context.
Car Payment Truth Calculator — full calculator for a new car purchase, with trade-in, tax, and fees.
This is an estimate for general informational purposes only, not financial or lending advice. Last reviewed: September 2026.