Car Loan Refinancing — 12% to 5%
Refinancing from 12% to 5% — what you actually save
Monthly savings by loan balance
| Loan Balance | Old payment (12%) | New payment (5%) | Monthly savings | Total savings (60mo) |
|---|---|---|---|---|
| $10,000 | $222 | $189 | $34/mo | $2,024 |
| $15,000 | $334 | $283 | $51/mo | $3,036 |
| $20,000 | $445 | $377 | $67/mo | $4,048 |
| $25,000 | $556 | $472 | $84/mo | $5,060 |
| $30,000 | $667 | $566 | $101/mo | $6,072 |
| $35,000 | $779 | $660 | $118/mo | $7,084 |
| $40,000 | $890 | $755 | $135/mo | $8,096 |
60-month remaining term assumed. Actual savings depend on your balance and remaining months.
Is a 7% rate drop worth the paperwork?
At 7%, this is a refinance worth doing. Most lenders charge no fees on auto refinancing. Free application, 24-hour approval, and $84 back in your pocket every month. The only reason not to: if you are within 12 months of paying the loan off.
Who this refinance actually makes sense for
12% to 5% is a 7-point improvement and the most dramatic refinance scenario on this list. It exists for buyers who financed with limited credit history or through a lender that aggressively marked up the rate and have since addressed both.
On a $20,000 balance with 48 months remaining, a 7-point improvement saves $80-95/month and $3,800-4,600 total. That is a year of car insurance, or 12 months of maximum Roth IRA contributions over the remaining loan life.
12% to 5% requires credit in the 740+ range. If your score is there, every day you stay at 12% is money leaving your household for no reason. Apply with a credit union first.
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See your full Ownership Score with the new rate
Frequently Asked Questions — 12% to 5%
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