Tired of paying hefty loan payments every month? Maybe you’re paying more than the vehicle’s actual cost. Auto loan refinancing is an excellent way to make some room in your budget.
But first, use an auto loan refinancing calculator to determine how much you can save by refinancing. This guide explains what an auto loan refinancing calculator is, how it works, and ways it can help you save. Let’s dive in!
Reasons to Refinance an Auto Loan
First off, let’s quickly review some situations where auto loan refinancing makes sense. Consider refinancing if:
- Your credit score has improved, and you can qualify for a lower interest rate.
- Interest rates have dropped below the rate on your current car loan.
- You want to switch lenders. Maybe the current lender has been imposing additional fees or a notoriously high interest rate.
- You want to spread out the loan term. Refinancing will allow you to extend the loan term, resulting in lower monthly payments.
How to Use an Auto Loan Refinance Calculator
So, where does an auto loan refinance calculator come in? It is a tool that helps you compare loans and estimate how much you might save by refinancing. Simply put, the calculator does the math for you, even showing how much you’ll pay each month.
Follow these steps to use an auto loan refinance calculator:
Enter auto loan details
Start by entering the details of your current car loan information, including:
- Your current interest rate
- Remaining balance
- Interest rate
- Monthly payment amount
- Time remaining on your loan
You will find all of these details on your current car loan contract. Some lenders also ask for your vehicle’s make and model before giving an estimate.
Compare refinance rates and terms
Next, check the length of the new loan. This is how long you will have to pay off the refinanced loan. A car loan refinance calculator will allow you to try different scenarios.
For instance, you could use a shorter term and a lower rate to see how it affects your monthly payment. Can you manage this increased monthly payment? Or you can use a longer loan term to see if you can manage the increased interest rate.
Consider the APR
In addition to the interest rate, compare the Annual Percentage Rate (APR) for both loans—current and refinanced.
How an Auto Loan Refinancing Calculator Helps
Using an auto loan refinance calculator has numerous benefits. For instance, it helps you see how much your payment could drop with a lower rate or longer term. This will allow you to make a detailed budget that isn’t subject to unplanned fluctuations.
Refinancing calculators are pretty simple to use. You can easily input different interest rates, terms, and fees to compare multiple lenders side-by-side.
With a calculator, you can decide to extend or shorten your loan term, depending on your income and other financial obligations.
What to Do Next
After using an auto loan refinance calculator, you can apply for prequalification. Reputable lenders like RefiJet have online refinance applications to streamline the process.
