Refinance Break-Even Calculator

Should You Refinance Your Car Finance?

Refinancing means settling your current vehicle finance agreement and taking out a new one — usually to secure a lower interest rate, or to lower your monthly instalment by extending the term. It can be a smart move, but in South Africa it carries costs that quick "lower your repayment" adverts rarely mention. This tool weighs both sides so you can see the real answer for your numbers.

What "Break-Even" Actually Means

Refinancing is a brand-new credit agreement under the National Credit Act, so a second initiation fee is capitalised into the new loan, and if you settle a large agreement without notice, the bank may add an early-termination charge of up to three months' interest. Those are real upfront costs. The break-even point is the month at which your accumulated monthly savings finally recoup them. Before that month you're behind; after it, the lower instalment is genuinely working for you.

The Trap: Lower Instalment, Higher Total Cost

Here's the catch the chart above makes visible. If you refinance onto a longer term than you had left, your monthly instalment drops — but you borrow for longer, so the total interest can climb even at a lower rate. You can break even in month one on a monthly basis and still pay thousands more over the life of the deal. That's why this calculator shows the lifetime cost difference alongside the break-even point: a refinance can be right for cash flow and wrong for your pocket overall, and only you can decide which matters more right now.

When Refinancing Genuinely Wins

The clearest win is refinancing to a lower rate over the same or shorter term — you cut both the instalment and the total cost. This is most achievable if your credit score has improved since you signed, if the SARB has cut the repo rate, or if your original deal was priced at a high margin above prime. Get a settlement letter from your current bank, then take a competing offer to one or two other banks — the balance is simply an amount owing, and any credit provider can finance it.

Related: if your reason for refinancing is a balloon payment that's now due, use the balloon refinance calculator instead. To check what you'd owe to settle today, try the early settlement estimator, and read balloon payments explained for the full picture.