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Can refinancing trigger your auto loan over? Part Of Refinancing a Car Loan In this series Refinancing a Car Loan Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by providing you with financial calculators and interactive tools that provide objective and original content, by enabling you to conduct research and compare data for free – so that you can make sound financial decisions. Bankrate has partnerships with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are advertised on this site are from companies that compensate us. This compensation can affect the way and when products are featured on the site, such as for instance, the order in which they appear within the listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. However, this compensation will have no impact on the content we publish or the reviews that you see on this site. We do not contain the entire universe of businesses or financial offerings that could be accessible to you. Westend61/Getty Images

3 min read Published October 20, 2022

Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ways and pitfalls of borrowing money to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to control their finances through providing clear, well-researched information that breaks down otherwise complicated topics into bite-sized pieces. The Bankrate promises

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They ensure that what we write will ensure that our content is reliable, honest and trustworthy. The loans journalists and editors are focused on the areas that consumers are concerned about most — the various types of loans available and the most competitive rates, the best lenders, the best ways to pay off debt and much more. So you’ll feel safe making a decision about your investment. Integrity of the editing

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So, this compensation can influence the manner, place and when products appear within listing categories in the event that they are not permitted by law. This is the case for our mortgage, home equity and other products for home loans. Other elements, like our own proprietary website rules and whether the product is offered in your region or within your personal credit score may also influence the way and place products are listed on this website. We strive to offer an array of offers, Bankrate does not include details about each credit or financial item or product. swaps your current loan by obtaining a new loan. It could result in an interest rate that is lower and a shorter or longer terms than the one you have currently. But opting for a longer term for repayment on a new loan can make you feel like you’re starting from scratch. Many people refinance their loans to save money. However, refinancing could not be a complete solution if you face more serious financial issues. What happens when refinancing starts your car loan If you decide the refinancing of your loan is the best choice for your financial situation and the terms that are offered can make your monthly loan payment lower. However, you want to be mindful of the loan term you choose to avoid the feeling of “restarting your loan” even if you’ve been making payments for a long time. It is best to avoid adding too many additional payments to settle the balance by choosing a term that is the same or less than the remaining period of your current loan. If, for instance, you have a remaining term of 36 months on your loan, you would refinance to 36-month loan. This will save the need to pay additional interest. Also, with an interest rate that is lower your monthly payments will be less. However, refinancing might not be advantageous if you have less than 24 month remaining of your automobile loan. It is common to pay the highest amount of interest in the initial year of the loan and will limit the cost savings you’d get should you decide to refinance near the close of the time frame for repayment. How refinancing affects the length of your loan duration The most frequent terms drivers are met with when financing a car. The terms vary from 24 to 84 months. The lower the monthly installment will be. If you take out a longer loan you could end up forced to pay thousands of dollars higher interest than with a smaller loan. Even though you could get a different interest rate as well, the term modification will be the most significant factor in whether or not you actually “reset” the terms of your loan. The term can be shortened or made longer — and the ideal choice will depend on your financial situation. To determine the best term length, take advantage of an opportunity to determine the length that best ensure that you are able to make monthly payments you can manage. When it’s a good idea to refinance your car loan There are a few primary scenarios where it is a your car loan. You’re struggling to afford the monthly installments. Refinancing and changing your current loan’s terms could give you more time to repay your vehicle or get a lower interest. You may also be able to from to your existing lender with no refinancing. Your since taking out this loan. More credit means more favorable conditions. This is especially true if you originally financed through an auto dealership. You financed your current loan through the dealership. If you used the dealership, you may be in a position to get more favorable loan terms with an outside lender. See how much you could potentially save by using a lower . If you decide to refinance then read the purchase agreement or contact you current lender to confirm they don’t for paying off the loan early. In the event that you don’t, you may be charged significant fees that exceed the advantages of refinancing. How to refinance your car loan If you determine refinancing is the right option then you should consider taking. Review the current loan and arrange the paperwork to submit you new loan application. Review your existing loan. Find the interest rate, the payoff amount, months remaining as well as information on any charges or penalties. Check your credit. Verify that you have a credit report in enough in order to be able to obtain a good rate. Examine your credit report for any errors while you’re at it. Compare lenders. Don’t choose the first lender with a reasonable rate. Check out several lenders such lenders, including their eligibility criteria, penalties and what rate and conditions you prequalify for. Refinance your loan. After you have decided to apply with the lender, apply on the internet as well as in person. The lender will let you know what you can qualify for and explain how the process works. The main thing to remember is that you’ll be starting all over again with a fresh auto loan in the event that you refinance, and possibly get a lower monthly payment or . However, before you apply, think about the potential risks associated when refinancing. Consider other methods to save money if refinancing isn’t the right choice for your financial situation.

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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ins and outs of securely borrowing money to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to manage their finances by providing concise, well-studied information that breaks down complex topics into manageable bites.

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