IT IS ALL ABOUT THE TERM! Let’s say you have an auto loan with a payoff of $20,000. You have 60 months remaining left on that loan, your current rate is 10% and you pay $424.94 per month. Not counting how much you have already paid into that loan, you will pay an additional $25,496.40* by the time you finish paying off your car.
| Currently 60 months @ 10% | Refinancing 72 months @ 8% | Refinancing 66 months @ 8% | Refinancing 60 months @ 8% | Refinancing 54 months @ 8% | Refinancing 48 months @ 8% | |
| Financed amount | $20,000 | $20,000 | $20,000 | $20,000 | $20,000 | $20,000 |
| Term | 60 | 72 | 66 | 60 | 54 | 48 |
| Interest rate | 10% | 8% | 8% | 8% | 8% | 8% |
| Payment | $424.94 | $350.66 | $375.56 | $405.53 | $442.25 | $488.26 |
| Total payments | $25,496.45 | $25,247.87 | $24,787.16 | $24,331.67 | $23,881.42 | $23,436.41 |
| Savings per month | $0.00 | $74.28 | $49.38 | $19.41 | ($17.31) | ($63.32) |
| Savings overall | $0.00 | $248.59 | $709.29 | $1,164.78 | $1,615.04 | $2,060.05 |
Everyone wants to save when they refinance their auto loan. The question is, where do you want to see the savings? Do you need the money each month, or do you want to save money over the entire life of the loan? You can usually see savings in your monthly payment or in the overall cost of the loan and sometimes it can even be both. In either case, it is worth a little time and effort to complete a short refinance application and you can begin saving today.
Here is a second example of going from 8% to 6% and how term can really make a monthly difference.
| Currently 48 months @ 8% | Refinancing 60 months @ 6% | Refinancing 54 months @ 6% | Refinancing 48 months @ 6% | Refinancing 42 months @ 6% | Refinancing 36 months @ 6% | |
| Financed amount | $20,000 | $20,000 | $20,000 | $20,000 | $20,000 | $20,000 |
| Term | 48 | 60 | 54 | 48 | 42 | 36 |
| Interest rate | 8% | 6% | 6% | 6% | 6% | 6% |
| Payment | $488.26 | $386.66 | $423.54 | $469.70 | $529.12 | $608.44 |
| Total payments | $23,436.41 | $23,199.36 | $22,871.01 | $22,545.63 | $22,223.22 | $21,903.79 |
| Savings per month | $0.00 | $101.60 | $64.72 | $18.56 | ($40.87) | ($120.18) |
| Savings overall | $0.00 | $237.04 | $565.40 | $890.78 | $1,213.18 | $1,532.61 |
Visit our Car Loan Calculator and you can play with the numbers for yourself. On a refinance, you can skip the part where it asks you to enter your down payment amount.
Remember that the whole point of car loan refinancing is to save money. So when you see your new interest rate, fees, and the new monthly payment you need to make sure that you’re actually saving money. The amount of savings will of course depend on the size of the loan, but in most cases, consumers can save hundreds of dollars over the life of their loan. OpenRoad Lending does not charge any application fees or any hidden charges for you to refinance your car loan. The process is simple and you could be on the OpenRoad to savings with just a few clicks of the mouse.
