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At month {{ holding_months }} {{ resultsReady ? formatSignedCurrency(computation.values.horizon_net_savings) : '—' }} Lifetime {{ resultsReady ? formatSignedCurrency(computation.values.lifetime_net_savings) : '—' }} Payment change {{ resultsReady ? formatSignedCurrency(computation.values.monthly_payment_change) : '—' }}
Use the date attached to the payoff balance, not an older statement date.
$
Use the dated payoff quote rather than the last statement balance.
%
Enter the interest rate from 0% through 60%, not the APR.
$
The model adjusts the final payment to clear the remaining modeled balance.
payments
Enter a whole number from 1 through 120.
Proposed refinance quote
%
Copy the contract interest rate from the current refinance quote.
$
The final modeled payment is adjusted to clear the remaining balance.
payments
Enter a whole number from 1 through 120.
months
The horizon result compares both cash paid and the balances still owed at that month.
$
The neutral default is $0. Check both the current contract and the new quote.
This setting is neutral while refinance fees are $0.
The neutral baseline is one month. A delayed first payment is not free interest.
MeasureCurrent loanRefinanceDecision useCopy
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The chart renderer is unavailable. The same canonical values remain available in Cost comparison.

Decision notes
Balance-adjusted method:
All amounts below consume the same canonical result used by the summary, chart, table, and exports.
current cash paid + current balance − refinance cash paid − refinance balance − upfront fees
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Verify the disclosures: This monthly-period estimate is not a lender payoff or recommendation. Compare the dated payoff and contract with the new APR, amount financed, finance charge, total of payments, payment schedule, and any prepayment penalty. Daily simple interest, irregular payments, add-ons, taxes, variable rates, credit effects, and vehicle value are outside this model.
Car Loan Calculator Estimate a car loan payment and payoff from deal terms including trade equity and financed charges, then compare interest and total payments.
Debt Repayment Calculator Plan monthly debt payoff from balances and APRs with extra payments and lump sums, then compare timing and interest across strategies.
APR Calculator Estimate APR from loan proceeds and finance charges across regular payment schedules, including a different final installment and note-rate comparison.
Effective Interest Rate Calculator Convert a nominal interest quote to an effective annual rate and compare compounding schedules, equivalent quotes and real or holding returns.

A lower auto-loan payment can come from a lower rate, a longer term, or both. Extending the term may improve monthly cash flow while increasing the time in debt and the total interest paid. A refinance comparison therefore needs the payoff balance, fees, payment schedule, and remaining balance at the time the vehicle may be sold or refinanced again.

Break-even is the point when the refinance has recovered its upfront cost and stays economically ahead of the current loan. Cash paid alone is not enough for an early comparison because the two loans may have different balances. Adding each remaining balance to the cash already paid treats that balance as a liability that still has to be settled.

  • Monthly payment change measures cash-flow difference, not total savings.
  • Holding-horizon savings compares cash paid plus balance still owed at a chosen month.
  • Lifetime savings compares modeled loan payments and upfront fees through payoff.
  • Term change shows whether the proposed schedule keeps the borrower in debt longer or pays off sooner.

A dated payoff quote is more useful than the last statement balance because auto-loan payoff amounts can change with accrued interest and contract charges. The refinance disclosure should also be checked for annual percentage rate (APR), amount financed, finance charge, total of payments, payment timing, and any prepayment penalty.

This estimate supports comparison; it is not a lender payoff, credit decision, or financial recommendation. Vehicle value, taxes, add-ons, credit effects, insurance, and ownership costs can still change the practical decision.

How to Use This Tool:

Compare documents issued for the same refinance decision rather than mixing an old balance with a current quote.

  1. Enter the effective Payoff quote date, payoff balance, current contract interest rate, scheduled payment, and whole payments remaining.
  2. Copy the proposed contract interest rate, scheduled payment, and payment count from the refinance quote. Set the expected holding horizon to when the loan may be sold, paid off, or refinanced again.
  3. Open Advanced to add refinance and payoff fees. Choose whether those fees are paid upfront or financed, and select the month containing the first refinance payment.
  4. Compare Durable break-even, the result at the holding horizon, lifetime savings, payment change, and term change. Stop and correct any non-amortizing-payment warning before relying on the result.

Interpreting Results:

Durable break-even is the first month from which balance-adjusted savings remain at least $0 through both modeled payoff schedules. If it occurs after the holding horizon, the refinance has not recovered its modeled economic cost by the month that matters to the borrower. No durable break-even means the refinance never stays ahead through the comparison period.

  • A positive result at the holding horizon means the refinance has lower modeled cash paid plus remaining balance after subtracting upfront fees.
  • A positive lifetime result can coexist with a longer term or an unfavorable short holding period.
  • Financed fees increase the new principal and accrue interest. Upfront fees reduce savings immediately.
  • Verify the lender’s APR and disclosure totals because this model uses the entered contract interest rate and payment schedule, not APR.

Technical Details:

Both loans are modeled as fixed-rate monthly schedules. Interest accrues once per modeled month on the opening balance, then the scheduled payment is applied. The final modeled payment is adjusted to clear the remaining balance rather than forcing an artificial overpayment.

Formula Core:

For each payment month, the balance follows the standard monthly recurrence below.

Bt = Bt−1 (1+r12) − Pt

Bt is the balance after month t, r is the annual interest rate as a decimal, and Pt is the payment made that month. A delayed first refinance payment allows interest to accrue before the first payment. Financed fees are added to the proposed opening balance.

The economic comparison at month t includes both cash paid and remaining debt:

St = Ccurrent,t +Bcurrent,t −Cnew,t −Bnew,t −F

C is cumulative scheduled cash paid, B is the remaining modeled balance, and F is any upfront refinance fee. Financed fees are already included in the new balance and are not subtracted again.

Rule Core:

Result Rule
Durable break-even monthEarliest month at which balance-adjusted savings are at least −$0.005 and never fall below −$0.005 later in either schedule.
Within horizonExpected holding months are greater than or equal to the durable break-even month.
After horizonA durable break-even exists, but it occurs after the expected holding month.
No durable break-evenNo month stays nonnegative through the remaining comparison period.
Non-amortizing paymentA regular payment that does not exceed that month’s interest is rejected because it cannot reduce principal.

Money values retain full precision during the schedules and are rounded to cents at the output boundary. Interest uses the entered annual rate divided by 12; the model does not reproduce daily simple-interest accrual.

Worked Example:

Upfront fee recovered within two years

A dated $18,000 payoff has a 10.5% current rate, a $585.04 payment, and 36 payments left. A 36-payment refinance at 6.5% quotes $551.68 per month with a $450 upfront fee. The modeled payment falls by $33.36, durable break-even occurs in month 9, and balance-adjusted savings at month 24 are $594.84. Lifetime payment savings after the fee are $751.05. These numbers describe the entered monthly schedules; the lender disclosures and contract still control the transaction.

Limitations:

The model assumes fixed annual rates, regular monthly periods, the quoted scheduled payments, and at most a one-, two-, or three-month delay before the first refinance payment. It does not produce a lender payoff or account for every contract rule.

  • Daily simple interest, irregular or extra payments, variable rates, late charges, taxes, add-ons, and credit effects are excluded.
  • Vehicle value and the risk of owing more than the vehicle is worth are outside the break-even calculation.
  • Check both contracts and applicable law for prepayment penalties, then include any relevant charge not already present in the payoff quote.

References: