Pros and Cons of Refinancing a Car
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The Pros of Refinancing a Car Loan
Lower Interest Rate and/or Monthly Payments
Different Loan Terms
You Can Afford to Pay More
You Could Get Better Terms
You Can’t Keep Up With the Bills
Frees Up Money to Pay Down Debt
A Source of Extra Cash
You Can Pay Your Loan off Earlier
The Cons of Refinancing a Car Loan
Finding a Lender Can Be Tough
Your vehicle is more than 10 years old You owe less than $7,500 on your current loan You owe more than $100,000 on your current loan Your car has more than 100,000 miles on it You drive for Lyft or Uber as your primary source of income or otherwise use your car for commercial purposes
Prepayment Penalties and Fees
Temporary Credit Score Dip
There’s a Risk of the Loan Becoming Upside-Down
4 Tips When You’re Refinancing an Auto Loan
1. Don’t be in a hurry as you shop around for a loan
2. Consider applying for prequalification
3. Remember the loan-related details
4. Plan your timing
Will Refinancing Impact My Credit Score?
When Is It Worth Refinancing a Car?
Refinancing could make sense if you lost your job, or a spouse is working less and you need to cut your monthly budget. A refinance might be a good idea if you can qualify for a better interest rate or better terms than you got on your old loan. Refinancing might also align with your goals. For example, if you’re on a mission to pay down debt, applying the monthly savings from refinancing can help you get there.
Can You Refinance With Bad Credit?
When Is It a Good Time To Refinance?
Credit Score Is Satisfactory
Auto Rates Have Gone Down
When Is It a Bad Time to Refinance?
If You’re Already Upside-Down
Interest Rates Continue to Rise
If You’re Close to the End of Your Loan Term
Alternatives to Refinancing Your Auto Loan
Trading in your car before paying it off Selling your car with a lien Paying off your car loan early Having someone take over your car loan
Frequently Asked Questions
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