If you have a car loan and are struggling financially or looking for a way to lower your car payment, you might want to think about refinancing it to lower your interest rate and lower your monthly payment.
When you refinance a car loan, you get a new loan to pay off the rest of the loan you already have. When you refinance, you not only get better loan terms, but you also get extra cash because your monthly payment goes down.
How often can I get my car loan refinanced?
There is no set number of times that you can refinance your car loan. You can refinance your car loan as many times as you want; the law doesn’t say you can’t. You can only refinance your car loan if you can find lenders who are willing to give you the money.
Some lenders are very flexible, but others are very strict, and if you’ve refinanced your car loan more than once, they won’t be interested in you. But there are some things you should think about before you refinance your car loan again. The questions are:
Do I have enough money to refinance?
Every time you apply for an auto refinancing, the process is the same. The lenders will ask you the following questions:
What’s the age of your car?
How many miles are there on it?
How much money do you still owe on your car loan?
Lenders usually want your car to be less than 10 years old and have less than 100,000 miles on it. If your loan will be paid off in less than a year, there’s a good chance you won’t be able to refinance it.
When did I last get a new loan?
Even though there’s no set time to refinance again, it’s best to make 6 to 12 on-time monthly payments to your current lender before refinancing. This will help you get approved by a lender.
This will not only show your new lenders that you’re a good candidate, but it will also help your credit score, since your payment history is a big part of it.
Should I refinance my loan again?
There are some things that will tell you if it’s time to refinance again or not. You can refinance your car loan again if you’re having trouble making your monthly payment, if you get a better interest rate, or if you want to change your cosigner.
But don’t refinance if there are big penalties for paying off the loan early, if you have less than a year to pay off the balance, or if you owe more on the car than it’s worth.
How will refinancing affect my credit score?
Before you try to refinance again, it’s best to know how it will affect your credit score. A hard inquiry lowers your credit score every time you refinance, and opening a new auto loan account will make the average age of your accounts go down, which will also hurt your credit score.
But these two things don’t matter as much when figuring out your credit score. If you refinance to be able to make full and on-time monthly payments, your credit score will go up in the long run.
How can you tell if a company that helps you refinance your car is reliable?
If you want to refinance your car loan, you can choose from a number of companies that offer different loan terms. And if you want to refinance your car with a reputable company, you need to do some research on 3 to 6 lenders and apply to all of them.
If the lender has a pre-approval option and you get pre-approved before submitting a full application, you get a rate quote with a soft credit inquiry that won’t hurt your credit card scores.
And if you can’t get pre-approved, make sure to apply to all of these lenders within a short amount of time, like 14 days. That way, all of these inquiries will be counted as one when your credit score is calculated.
After getting pre-approved and loan offers from these lenders, you should think about the following:
What is the interest rate each lender is giving?
How long does each lender give you to pay back your loan?
Is there a fee I’m not aware of?
How well do the lender’s customers like them?
Is there a big fee to start the loan?
Is there a fee for paying it off early?
Doing a lot of research on your new lenders and thinking about the things we’ve already talked about will not only help you find the most reliable auto-refinance with a good interest rate, but it will also help you spot any red flags that might come with a lender. When you get a loan to refinance your car, some lenders will charge you a lot of money for the loan’s origination, and others will charge you a fee if you pay off the loan early. Both of these things will make auto refinancing more trouble than you bargained for, so watch out for them.
Lastly, to find the best company to refinance your car, look for one with a lower interest rate, no penalties for paying off the loan early, a shorter term, and a high customer satisfaction rating.
How long do I have to wait until I can refinance my car?
You don’t have to wait a certain amount of time before refinancing your car. In fact, you can do it as soon as you buy it. For example, if you finance the car through the manufacturer, your car dealer will give you a cash rebate. After taking the offer, you can refinance with a bank or online lender to get a lower interest rate.
But this might not be true for people with bad credit, who might need to show that they have always paid their loans on time before new lenders will consider them. Also, some banks may have rules about how soon they will consider refinancing a car loan.
All of this being said, it’s best to refinance your car loan as soon as you can. If you wait too long, you’ll spend more money and take longer to pay off the car, which will cost you more money.
How can I get my car payment down without getting a new loan?
Refinancing your car loan makes it easier to pay it off, but it also increases your interest rate and makes your loan last longer. But if you’re having trouble making your car payments, you don’t have to refinance to find ways to lower your car payment. Other options than auto refinancing are:
Loan modification request.
You can sell it yourself and get one that costs less.
Take it to a car lot and trade it in.
Method 1: Ask to change the loan.
Contact the lender and ask to speak to someone who can help. The first person you talk to may not be able to help you. Tell them about your financial problems. Most will be willing to change your loan by lowering the interest rate to make your monthly payments more affordable or by putting off your payments for a while.
The sooner you tell your lender about your money problems, the better your chances are of getting your loan changed. Most lenders would rather change loans than go through the expensive and time-consuming process of taking back a car.
Method 2: Sell it yourself and buy one that costs less.
You can also sell your car on your own to make more money and buy a cheaper car. If you trade the car in at a dealership, you would get more money. You can put your car up for sale on Facebook marketplace, craigslist, eBay, and other sites. Set the price a little higher than what you need to pay off the loan, so that if the price goes down during negotiations, it will still pay off the loan.
Method 3: Trade it in at a store.
This is the best choice for people who want to reduce their car payments but can’t sell their cars themselves. Almost all car dealers will take your old car in trade for a new one, but some will buy your car even if you don’t buy a car from them.
Before you trade in your car, find out how much it’s worth as a trade-in and see if you can sell it for more or less than that to cover what you still owe the lender.
When you refinance a car, do you have to put money down?
When you buy a car, you have to put money down to lower your payments. When you refinance a car, however, you don’t have to. You don’t need a down payment, but some lenders will want you to pay down your car loan balance before they will refinance you.
To refinance your car, you don’t need a down payment, but you do need equity. Equity is the difference between how much you still owe on your car loan and how much your car is worth right now. This equity shows the lender that your car is worth something.