When Can You Refinance a Car Loan?
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You can refinance a car loan at any time, but there are several factors to consider before refinancing.
If you recently bought a car, you may wonder when you can refinance your car loan to reduce the interest rate or lower the payment.
Strictly speaking, you can refinance your auto loan as soon as you find a lender that’ll approve the new loan. That may be a challenge since most lenders won’t refinance until the original car loan has been open for at least two to three months.
Delayed lender approval can be an obstacle to refinancing your car loan, but there are potential benefits to waiting.
When to refinance your car loan
Here are some general guidelines to help you determine the best time to refinance.
During the first 60 to 90 days of the loan |
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A least 6 months into the loan |
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2 years or more remaining on the loan |
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Should you refinance?
Regardless of when you refinance, you should take time to apply with multiple lenders and get more than one offer. Comparing refinance offers with your current auto loan can help you decide whether to refinance your auto loan at all. Our auto loan refinance calculator below can help you compare offers.
You're most likely to benefit from auto loan refinancing in these situations:
- Your credit score has increased since you took on a car loan
- Interest rates for auto loans have gone down since you got the loan
- You took a higher-rate loan at a dealership than you would qualify for with a different lender
- You're having trouble making the monthly payment. Refinancing to a longer term may reduce your payment, but you could end up paying more interest over the life of the loan
Source: Nerdwallet