The true cost
Car Finance Refinance Calculator
See whether refinancing your car finance at a lower rate actually saves money.
New monthly payment
£373.98
Total extra cost
£503
Refinance comparison
- Cost if you stay
- £12,960
- Cost if you refinance
- £13,463
A lower rate can cut the total, but stretching the term can wipe out the saving. Compare the total cost, not just the monthly — and watch for any settlement or arrangement fees.
How we work this out
We work out the monthly and total payable on your current balance at your current rate, then at the new rate, over the remaining term. Monthly = balance × monthly rate ÷ (1 − (1 + monthly rate)^−term). Saving = current total payable − new total payable.
Figures are estimates. Check for early settlement fees on your current deal and arrangement fees on the new one before you switch.
Full method: how we calculate.
Refinancing car finance means replacing your current deal with a new one, usually to get a lower interest rate. This calculator compares your current monthly and total cost against a new rate, so you can see the true saving — or whether it is not worth it.
A lower rate cuts the monthly, but a longer term can wipe out the saving. Enter your outstanding balance, current rate, the new rate and the term above to compare both side by side.
What is refinancing car finance?
Refinancing is taking out new car finance to pay off your existing deal, normally to secure a lower interest rate or a smaller monthly payment. Your old agreement is settled and replaced by the new one.
You might refinance because your credit score has improved, because rates have fallen, or because the monthly is straining your budget. It only saves money if the new deal's total amount payable is lower than what you have left to pay on the current one.
Does refinancing actually save money?
Refinancing saves money when the new rate is low enough to beat your current total cost over the same remaining term. Dropping from 12.9% to 6.9% on a £12,000 balance over 24 months saves around £730.
Worked example
Current deal vs new deal compared
Compare the two deals on the total amount payable, not just the monthly. A lower rate over the same term is a clear win; a lower rate over a longer term may cost more overall.
Run your own numbers, then check the deal fairly on the APR calculator, which turns any monthly quote back into a true-cost figure.
| Current (12.9%) | Refinanced (6.9%) | |
|---|---|---|
| Monthly | ≈ £566 | ≈ £536 |
| Total payable | ≈ £13,583 | ≈ £12,854 |
| Interest | ≈ £1,583 | ≈ £854 |
Watch the term and the fees
A lower rate can still cost more if you stretch the term, and fees can swallow a small saving. Always compare like for like over the same remaining months.
- Stretching the term lowers the monthly but adds interest — a longer, lower-rate deal can cost more in total.
- Your current lender may add an early settlement fee — see the settlement calculator for the figure to clear.
- The new lender may charge an arrangement fee, which counts towards the true cost via the APR.
When refinancing is not the answer
If you only want a lower monthly, overpaying or voluntary termination can be better than refinancing. Refinancing is about the rate, not just the payment.
If your goal is to clear the finance faster, overpaying cuts the interest without a new agreement. If you simply want out of the car, you can settle early or, once you have paid half the total, use voluntary termination.
Could a hidden-commission claim be worth more than refinancing?
If your current deal was mis-sold between 2007–2024 through hidden commission, redress could outweigh any refinancing saving. It is worth checking before you switch.
The FCA's redress scheme follows the Supreme Court ruling of 1 August 2025. Estimate your position with the compensation estimator — an estimate, not a promise, and free to claim yourself.
Frequently asked
What does refinancing car finance mean?
Does refinancing car finance save money?
Can refinancing cost more overall?
Are there fees for refinancing car finance?
Should I refinance or overpay?
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