Is auto loan refinancing worth it?
“Worth it” is usually a math question first (APR, fees, break-even), then a constraints question (cashflow, term length, risk). This page gives a simple way to decide without hype.
Start with two comparisons
- Monthly payment: does it go down, and by how much?
- Total cost remaining: does the refinance reduce what you’ll pay from today to payoff?
Then check break-even
Break-even is when monthly savings have “paid back” the fees. If break-even is far out (or can’t be computed because payment doesn’t drop), the refinance may not help soon.
A common trap: payment goes down because the term gets longer, while total cost goes up.
A quick rule of thumb
- Meaningful APR improvement (often 2%+)
- Fees you can explain and verify
- Break-even you’re likely to reach
- No hidden term extension that increases total cost