Last Updated On: September 23, 2016

When Can You Refinance Your Car Loan?

When Should You Refinance Your CarIf you are considering refinancing your car loan you may be able to take advantage of some of the lowest auto loan rates in years. However, finding the best auto refinancing companies is the key to a better auto loan than your existing auto loan.

There are a lot of online companies claiming to be the best refinance companies for bad credit but are not interested in helping people repair bad credit with an auto loan.

No matter what your reason for refinancing your car loan, the interest rate will greatly affect your payments and your credit score will affect your interest rate. So now is a good time to refinance an auto loan because of low-interest rates and to refinance a car loan is one of the best ways to raise your credit score.

To answer the question of, “when should I refinance my car loan”? Let’s look at some reasons someone would want to refinance a car as soon as possible and the requirements to refinance a car online.

Replace Your Current Car Loan With A Lower Interest Rate

If you have recently purchased a car and the dealer prompted you to take a high interest auto loan that has high monthly payments, you may need to refinance the loan to lower your car payments.

Alternatively, your credit may have been good when you applied for the loan, but the dealer told you this was the best interest rate you could get at that time. Unless you searched for financing yourself, you do not know if that was true. Many dealers use loan companies that have higher than average interest rates to receive the loan incentive offered by the lender to the dealer.

They can also take advantage your FICO auto industry credit score by choosing the lowest score shown out of six to choose from. You do not deserve to pay the higher interest fees so a dealer can make a bigger profit off of your loan.

Banks auto loan lenders can offer lower interest rates to subprime credit buyers, making it possible to find great interest rates on subprime options.

Get The Best Auto Loan Rates

If it has been some time since you got your original bad credit auto loan. The interest rates may have dropped several points, creating an opportunity to take advantage of the new lower rates. If you have an APR higher than 7%, you may be able to do better.

Even two points can save you hundreds or even thousands of dollars over the term of the car loan. You can check this with the use of an auto loan payment calculator. As you put in the loan amount and the APR along with the loan terms you want you will see what your estimated payments will be. You will also see how the loan term will affect your monthly payments.

Car Equity Loan with Bad Credit

If you are struggling with your budget to make your monthly payments, reducing your car payment is the best way to adjust your cash flow without affecting your lifestyle.

Replacing your bad credit car loan can extend your loan term and lower your monthly payments without hurting your credit. You will need to know your present car resale value versus the amount you will owe before committing to this type of loan or you could go upside down with a car loan.

If you had bad credit or had not established any credit at the time you bought your new car, you are probably paying too much for your high-interest car loan. You can take advantage of your improved credit score and refinance your auto loan with bad credit for a new car loan with a better rate.

Don’t know your credit score? You can check your credit score right here for free.

If you are involved in a dispute settlement, divorce or separation settlement, child custody or drawing up a will, you will need a highly skilled lawyer. A car refinance is one of the best ways to get that large amount of money it takes to pay for legal fees.

How Soon After a New Car Loan Can I Refinance My Auto Loan?

You can refinance your auto loan at any time if you are going to be changing lenders. There is no set amount of time you have to wait to find a replacement car loan if you use a different lending company than the one who gave you your existing auto loan.

You will need to check your existing loan first to see if there are any early payoff penalties or early payment charges that will apply. If so, you need to decide if the new loan will save you enough money over time to compensate you for the penalty that will roll into the new loan.

In most cases you will be able to skip a car payment during the month of the refinance process.

How Can I Qualify To Refinance My Car With Poor Credit?

You may want to check with your lender to see if they are interested in offering you a refinance with a lower rate or shorter term but in most cases, the only way to get a really good deal is to shop around for the best refinance car loan companies for bad credit. Lenders are not likely to offer you a lower rate if they have you locked in with a higher one.

If you need to replace your high interest rate loan with a more reasonable APR, then you should make it a priority. Getting a better auto loan can save money, you are now losing with your bad credit auto loan. You may be able to save between $500 and $1,800 over the next couple of years.

Cash Back Auto Refinance with Bad Credit

It is not recommended to take car equity loans with bad credit or lengthen your loan term just to lower monthly payments without getting a lower interest rate. If you are having financial difficulty and you must lower your payment to prevent defaulting on your loan, you may have no choice.

Using a cash back auto refinance with bad credit to increase your term is a bad idea and can put you upside down on your loan. Check the resale value of the car before accepting a longer term. You can use our auto payment calculator to get an estimate of the money you will owe for the extended payments.

Can You Refinance Your Present Car Loan Easily?

Getting your present car loan refinanced sounds complicated but it is easy to do online. You have all the time you need to collect your paperwork and fill out the loan application in the privacy of your home.

You probably remember when you bought your car. The loan application process was stressful, and you probably felt funny giving you personal finance information to the salesperson. Then you waited to hear if you were going to be accepted.

No one likes rejection but it’s uncomfortable to deal with if you feel like you are being manipulated by the salesman. Now the tables have turned.

  • You can take your time online to search for the best refinance auto loan company and use payment calculators to estimate what your payments will look like before you submit your application.
  • The best way to find a good auto refinance lender is to use a loan broker like Valley Auto Loans. They review your application with several leading lending institutions. In most cases they will compete with each other for your business.
  • The lender that best fits your financial needs will run your credit check, so you get the best offer with a single credit check. You will receive a loan offer that you can use or compare with other offers.
  • There is no obligation to except the offer and all applications are accepted by Valley Auto Loans at no cost to you.

Does Replacing Your Original loan Affect Your Credit?

Yes! It can be a very positive tool for repairing your credit score. It is good to refinance a car when you are getting a better APR and lower payments. Every payment made on time is a step to a better credit score.

Don’t wait for your bad credit auto loan to break your budget and put you behind on payments. A better auto loan may be just around the corner. Low credit score auto loans commonly have rates around 18%, but you can qualify for a lower rate as your credit improves.

Applying a down payment to a new auto loan with bad credit also produces lower payments and pays off some of the principal without adding longer loan terms.

Refinancing my current auto loan may not be best

Refinance high mileage cars may or may not be the best thing for you especially if the vehicle is not worth as much as you owe. Most lenders will not offer you a loan that will leave you owing more for a car than it is worth.

Other factors can prevent you from refinancing like the age of the vehicle and the amount of money you are trying to finance. Most lenders will not finance a vehicle under $7,500. Vehicles that are over seven years old or have more than 120,000 miles may not qualify.

If you are unhappy with the loan you currently have, don’t give up. Recognizing the need to replace your car loan is the first step. Get a new car loan or trade it, but you do not have to stay locked into a bad loan that is not rebuilding your credit and may be putting you at further risk of default.

Apply today and see if you are ready for a better auto loan.