Car refinancing boasts numerous benefits, advantageous enough to compel borrowers to consider as a viable option. However, some people might need a little more data at hand to take the final leap. This is where loan refinance calculators come in.
A loan refinance calculator will allow you to calculate how much money you’ll save, the new payment amount, and the loan term's impact on that amount. If you’re not familiar with these calculators, the following will guide you in the right direction.
What Information Do You Need to Use a Car Refinance Calculator?
You may need details about your existing loan to use the calculator effectively. You can check your loan statement or call your lender to find out.
In a typical auto refinance calculator, you will find:
- A column on the left-hand side to enter your current loan information
- A column on the right side for your new loan information
What Information Do You Need to Enter for a Current Loan?
Original loan amount: This refers to the total borrowed amount. If your car is new and you've made a down payment, it is the car's purchase price minus the amount of money you put down.
Current interest rate: This is the interest rate you got when you first received your loan.
Current loan length: This implies the number of months you have to pay a loan off
Current loan balance: If you have been paying on time every month, your current loan amount should be less than the borrowed amount.
Months remaining on your current loan: Keep in mind that you cannot refinance at a better rate if you don’t have a consistent and on-time payment history.
What Information Do You Need for a New Loan?
Refinanced loan amount: It’s important to know the amount you still owe. If you owe more than the worth of your car, a lender may refinance higher than the car’s book value amount.
New loan term: You can decide your loan term for auto refinancing. Shorter-term means a lower interest rate, while longer-term means a higher interest rate.
New interest rate: Refinancing your car at a lower rate is possible if the interest rate has dropped or if you have managed to improve your credit score.
Auto refinance calculators are readily available online, and you can put the required figures in them to get an estimate of how much you can save by refinancing. With this information in hand, you can decide to refinance with confidence.