Car-loan Refinance Break-even Checklist

Build the current-loan baseline

Request a dated payout figure rather than relying on an app balance. Record the remaining term, scheduled repayment, remaining interest and any discharge or early-payout costs.

The refinance authority page explains whether replacing the loan may be suitable. This checklist turns that decision into a consistent cost comparison.

Build the replacement-loan scenario

Record the proposed amount financed, rate, comparison rate, term, establishment and ongoing fees, repayment and total amount repayable. Use the same remaining term as the baseline first; model a longer term separately so the cash-flow effect does not hide extra cost.

• Current payout amount
• Current remaining repayments and payout costs
• Replacement establishment and ongoing fees
• Replacement repayments over an equivalent term
• Vehicle value and any equity shortfall

Calculate the break-even point

Subtract the replacement loan’s total remaining cost from the current loan’s total remaining cost, then compare any upfront switching costs with the expected monthly saving. The number of months required to recover those costs is the break-even period.

If you expect to sell, repay early or replace the vehicle before break-even, the refinance may not produce the expected saving. Also compare flexibility, payout terms and the risk of extending debt beyond the vehicle’s useful life.

Treat hardship as a separate problem

If repayments are difficult, contact the existing lender early and ask about hardship assistance. Refinancing is not always available or suitable, particularly if it merely shifts unaffordable debt into a longer contract. Free financial counselling is available through National Debt Helpline.