Should You Refinance Your Car Loan?

(Last Updated On: November 9, 2017)

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.

How Soon Can You Refinance A Car Loan After You Get It?

What is the best time to refinance my car? No matter what your reason for refinancing your car loan, you should always look at the available interest rate. The interest rate will greatly affect your payments and new refinance terms. Your credit score will affect your interest rate that you qualify for, so if your credit score is low, now is a good time to refinance an auto loan because of low-interest rates. Keep in mind that refinancing a car loan is one of the best ways to raise your credit score and get better financing terms.

To answer the question of, “when should I refinance my car loan” or “how soon can you refinance a 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.

Can I Replace My 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 need to refinance the loan to lower your car payments as soon as possible. You do not need to wait for any specific time period after getting auto financing, you just need to find a better car loan with more acceptable terms.

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 credit incentive offered by the lender to the seller that you do not see.

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

There are many banks and financial auto loan lenders that can offer lower interest rates to subprime credit buyers, making it possible to find excellent interest rates on subprime options. Valley Auto Loans is a leading loan broker that can find the best lenders for you so you can refinance your car as soon as you need too.

When Should I Refinance My Car Loan to Get The Best 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.

If you have a variable rate on your existing loan, you will want to refinance that loan while the interest rates are low to get a fixed low rate. Fixed rate loans have a fixed interest rate that will not change throughout the course of the loan agreement so if the economy drops off your payments will stay the same.

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 will see what your estimated payments will be. You will also see how the loan term will affect your new monthly payments.

Cash Out, 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. Alternatively, you can remove some equity with a “cash out refinance.” 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.

Are All Upside-down Refinancing Loans A Bad Deal?

refinancing with bad creditNo. Not all refinancing loans to get cash out are financially dangerous! Even if you owe more on the car than it is worth, some car refinancing can be a huge benefit.

Suppose you need money for something important like legal fees or unexpected travel costs. Most people would have no choice but to take out a personal loan from their bank.

If you compute the finance charges of a personal loan vs. the finance charges of a car refinance loan, you will see that car loans are always a better deal than personal loans. Also, it is easier on your budget to have one car loan payment a month instead of two loans.

Even if it appears that you owe more for your one car loan than the car is worth, it is a better deal than owing money on a second, unsecured 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. Lenders are not willing to change a loan contract that you just recently accepted.

Requirements to Refinance a Car You Are Currently Paying On

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.

When Can You Refinance Your Car With Bad 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 bad credit, high-interest rate loan with a more reasonable APR, then you should make it a priority to shop around and compare lenders. By switching auto loans, you may be able to save between $500 and $1,800 over the next couple of years depending on your terms.

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 reduce 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 not a good 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 Car Loan Easily?

Getting your existing 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 and it’s uncomfortable to deal with if you feel like you are being manipulated by the salesman. With online refinancing, 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 so you receive lower rates.
  • 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 any offer you don’t like and all applications are accepted by Valley Auto Loans at no cost to you.

Can You Refinance Your Car Without Damaging 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 car 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.

Can I Refinance a High Mileage Car?

Refinancing high mileage cars will 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 an automobile 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 just how soon you can refinance your car loan and if you are ready for better auto loan offers.