“Is it the right time to refinance my vehicle?” is a question several vehicle owners think about, especially when they come across low rates. When it comes to auto loans, vehicle owners often make the leap too quickly and then find themselves stuck in a situation far from ideal.
Even though auto refinancing a vehicle seems like a way out of a bad loan, it’s imperative to do your homework regardless and find out if the new loan is worth it. One way to figure it out is by using an auto refinance calculator.
What Is an Auto Refinance Calculator?
Auto refinance calculator helps you learn how much money you'll be able to save with a new loan. It works by showing you the amount you can save on monthly payments, interest, and even both in some cases.
What Information Do You Need to Input?
It requires you to input certain details of your existing loan such as:
- The monthly payment
- Remaining amount/balance
- Current interest rate
- The remaining term of the loan
Here’s more on the information you need to input:
The original amount of the loan: This refers to the total amount you bought the car for. The total usually includes the amount pertaining to license fees, interest, taxes, and the principal.
Existing balance of the loan: This refers to the total sum you owe on your car at the moment.
Existing rate of interest: The rate of interest of your existing loan is the amount you’ve agreed to pay your lender each year. Since it’s based on the percentage of the loan, you’re required to pay it off over the entire life of the loan.
The initial term of the loan: The initial loan term is a good auto refinance determinant as it indicates the amount of time a borrower originally had to pay a loan off.
The remaining term of the loan: As the name suggests, the remaining loan term is calculated once you start paying the loan off. It refers to the time you have left until the loan is fully paid off.
The new term of the loan: Auto refinancing refers to paying an old loan off with a new one. Therefore, the new loan term indicates the amount of time you will need to pay the new loan off.
In conclusion, using an auto refinance calculator is the best way to determine whether getting a new loan is worth your while when it comes to saving money. It helps you get prequalified once you know what the interest rate and term of your new loan are like.