Credibrate

Car Refinance Savings Calculator

Thinking about refinancing your car loan? Enter your current outstanding balance, APR, and remaining term alongside the new deal to see how much you could save each month and over the life of the loan.

Reviewed by Richard Ross · Last updated April 2026

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How Car Refinance Savings Calculator works

How the refinance saving is calculated

Refinancing replaces your existing car finance with a new loan at a different rate, term, or both. This calculator compares two payment streams on the same outstanding balance. It first works out your current monthly payment by amortising the balance over your remaining months at your current APR, then does the same for the new deal at the new APR and term. The difference between the two monthly figures is your monthly saving; the difference between the total amount left to pay on the old deal and the total cost of the new deal is your overall saving. Because both calculations use the same starting balance, the comparison isolates the effect of the rate and term alone — it does not add the settlement figure on top, so treat the result as the saving available once you have refinanced, not the upfront cost of switching.

Worked example: refinancing a £12,000 balance from 9.9% to 5.9%

Suppose you have £12,000 outstanding with 36 months remaining at 9.9% APR. Amortised over 36 months, that is roughly £386.64 a month, so £13,919 left to pay in total. A new lender offers 5.9% APR over the same 36 months. The new monthly payment is about £364.54, leaving a total of £13,123. Refinancing therefore saves around £22 a month and roughly £796 over the remaining term — purely from the lower rate, with the term held constant. If you instead stretched the new loan to 48 months the monthly payment would fall further, but you would pay interest for an extra year, which usually wipes out the total saving. Always check both the monthly and total figures before deciding, and add any new-lender arrangement fee to the new total before comparing.

Your right to refinance under the Consumer Credit Act

For any regulated car finance agreement, section 94 of the Consumer Credit Act 1974 gives you the statutory right to settle early at any time. To do so you request a settlement figure, which your lender must supply under section 97 — in practice within about 12 working days. That figure is the outstanding balance less a statutory interest rebate calculated under the Consumer Credit (Early Settlement) Regulations 2004 (made under section 95 of the Act). Those regulations let the lender defer the settlement date when working out the rebate, which is why a settlement figure can include up to roughly 58 days of additional interest compared with simply stopping payments. You then use that settlement figure as the amount your new lender pays off. HP and personal loans are straightforward to refinance this way; PCP can also be settled and refinanced, but the balloon (Guaranteed Future Value) forms part of the balance, so the settlement figure is larger. A new finance application triggers a hard credit search, and the old agreement is then marked as "settled" on your credit file, which is a neutral outcome.

Why negative equity can stop you refinancing

Refinancing only works if a new lender will advance enough to clear your current settlement figure, so negative equity — owing more on the agreement than the car is currently worth — is the most common obstacle. Most lenders set a maximum loan-to-value on car finance, so if your settlement figure is, say, £11,000 on a car worth £8,000, they will typically decline to lend the full amount or ask you to cover the shortfall in cash. PCP agreements are especially prone to this in the early years, because the deferred balloon keeps the settlement figure high while the car depreciates fastest in its first 18 to 24 months. Before applying, compare your settlement figure against a realistic trade-in or private-sale valuation. If you are underwater, refinancing usually has to wait until the falling balance and the car value converge, or until you can put down a deposit to bridge the gap. The negative equity calculator shows the size of any shortfall so you know where you stand before a hard credit search is run.

How soon you can refinance, and whether you need a deposit

There is no statutory waiting period before you can refinance: section 94 of the Consumer Credit Act 1974 lets you settle a regulated agreement early at any time, so in principle you could refinance within months of signing. In practice, lenders tend to look more favourably on an application once you have built a short payment history and the car has passed its steepest early depreciation, which improves your loan-to-value and your chances of approval. A deposit is not usually required to refinance, because the new loan simply repays the old settlement figure rather than buying the car afresh. However, putting cash down lowers the amount borrowed, improves your loan-to-value, and can unlock a lower APR — and it is the standard way to clear negative equity that would otherwise block the application. Whatever you do, add any new-lender arrangement fee to the new loan total before judging whether the switch genuinely saves money overall.

Frequently asked questions

When should I consider refinancing my car?

Refinancing makes most sense when interest rates have dropped since you took out the original deal, your credit score has improved (qualifying you for a lower APR), or you are on a high dealer-arranged rate. The earlier in the agreement you refinance, the more interest you save.

Can I refinance any type of car finance?

You can refinance HP and personal car loans by settling early and taking out a new loan. PCP agreements can also be settled and refinanced, though the balloon payment complicates things. Under the Consumer Credit Act 1974 (section 94), you have the right to settle any regulated agreement early.

Does extending the term save me money?

Extending the term lowers your monthly payment but usually increases the total cost because you pay interest for longer. This calculator shows both figures so you can weigh affordability against total cost.

Are there costs to refinancing?

Your current lender may apply up to 58 days of additional interest as part of the early settlement figure. Some new lenders charge arrangement fees. Always factor the settlement figure and any fees into the comparison — use our early settlement calculator for the exact figure.

Will refinancing affect my credit score?

A new finance application triggers a hard credit search, which may temporarily lower your score by a few points. However, keeping up payments on the new agreement will rebuild your score quickly. The settled agreement will appear as "settled" on your credit report, which is a neutral outcome.

What APR can I get when I refinance a car loan?

Car refinance rates depend on your credit profile, the loan amount, the car's age, and the remaining term. In the UK, representative car finance APRs typically range from around 6% for the strongest applicants on newer cars to well above 15% for those with thin or impaired credit. The rate you were originally quoted is not fixed for life — if your credit has improved or base rates have fallen since you signed, refinancing onto a lower APR is exactly where the saving comes from. Always compare the new APR against your current one in this calculator rather than focusing on the headline monthly figure alone.

How much can I save by refinancing my car?

Your saving depends on the gap between your old and new APR, your outstanding balance, and how many months remain. As a rule of thumb, the larger the rate drop and the more of the term still to run, the bigger the saving. Refinancing late in an agreement saves little, because most of the interest has already been charged. Enter your figures above to see both the monthly saving and the total saving over the life of the new loan — the total figure matters most, because a lower monthly payment achieved by extending the term can still cost more overall.

Can I refinance a PCP agreement?

Yes. You exercise your right to settle the PCP early under section 94 of the Consumer Credit Act 1974, then take out a new loan to cover the settlement figure. The complication is the balloon payment (Guaranteed Future Value): it forms part of the amount you settle, so the figure you need to refinance is larger than your monthly payments alone suggest. Refinancing a PCP onto a standard loan also means you give up the option to simply hand the car back at the end, because you become the owner. Request the settlement figure from your lender first, then enter it as the balance here.

Is it worth refinancing a car in the UK?

It is worth refinancing when the total cost of the new deal is lower than the total you have left to pay on the current one, after accounting for any new-lender arrangement fee. This is most often the case when interest rates have dropped, your credit score has improved, or you are stuck on an expensive dealer-arranged rate with plenty of term remaining. It is rarely worth it near the end of an agreement, or when the only way to cut the monthly payment is to extend the term significantly. This calculator shows both figures so you can judge it on the total cost, not just the headline monthly saving.

Can I refinance a car with negative equity?

It is difficult. Negative equity means your settlement figure is higher than the car is worth, and most lenders will not refinance significant negative equity because the new loan would exceed the value of the asset securing it. You may still be able to refinance if you cover the shortfall with a cash deposit, bringing the loan-to-value back into an acceptable range. PCP agreements are the most likely to be in negative equity early on, because the deferred balloon keeps the balance high while the car depreciates fastest. Check your settlement figure against a realistic valuation before applying, as a declined application still leaves a hard search on your file.

How soon after taking out car finance can I refinance?

There is no minimum waiting period. Section 94 of the Consumer Credit Act 1974 gives you the right to settle a regulated agreement early at any time, so you could refinance within months of signing. In practice, refinancing tends to make more sense once you have built a short payment history and the car has passed its steepest early depreciation, which improves your loan-to-value and your chances of approval. Refinancing early in the term saves the most interest, but only if a new lender will advance enough to clear the settlement figure in full.

Do I need a deposit to refinance a car loan?

Usually not. Refinancing replaces your current agreement with a new loan that pays off the settlement figure, so no fresh deposit is normally required. A deposit is only needed if you are in negative equity and have to bridge the gap between the settlement figure and what a lender will advance, or if you want to reduce the amount borrowed to secure a lower APR. Add any arrangement fee to the new loan, then compare the total against what is left on your current deal, to see whether the switch is worthwhile.

These calculations are estimates based on 2026/27 HMRC and DVLA rates. Speak to a lender or qualified financial adviser for a personalised quote.