How Many Times Can You Refinance An Auto Loan?

As long as you find a new lender willing to give you the money, you can refinance your auto loan as often as you like. You might even save enough money to justify refinancing, but you must be careful to avoid having any savings you might realize eaten away by fees and interest.

The number of times you can refinance a car is not regulated by law. However, the lender you want to refinance with must concur, and each has different requirements. Lenders are in the business of making money, so if they discover that you've refinanced your automobile more than once, they can decide not to extend you a loan.

How long do you have to wait to refinance your auto loan?

There is technically no state or federally-mandated waiting period before refinancing a car loan, so you could theoretically refinance your automobile nearly immediately after purchasing it. However, in reality, you might accept a cash refund from an automaker in exchange for manufacturer financing, then go back to your bank, credit union, or online lender to refinance at a lower rate.

Most often, these possibilities apply to people with good credit. However, borrowers with bad credit might need to demonstrate a track record or a minimum time frame during which they made full and on-time payments. For instance, a bank can insist that you hold your present auto loan for a certain amount before considering you for refinancing.

When to refinance an auto loan?

As often as it will save you money or get you out of a tight financial situation, you should refinance your auto loan. This implies that you won't likely have a need to refinance every month or even every few months, but rather when you experience financial success or failure.

A promotion could result in a pay raise that lowers your debt-to-income ratio and makes you a more appealing candidate for lenders. On the other hand, you might need to refinance for reduced payments if you lose your job and your salary decreases.

When does refinancing make sense?

In general, refinancing makes sense when you want to do it. But there are a few times when it will definitely come in handy.

  • 1. You require a smaller payment. By obtaining a lower APR and/or a longer term, you might be able to refinance and lower your monthly auto payment.
  • 2. You'll typically end up paying more in interest over the course of a long-term auto loan. If there is no prepayment penalty, you might refinance for a lower payment now and then refinance again for a shorter period when your financial situation improves. Alternatively, you could put more money toward the loan principle. You could reduce your interest costs with both methods.
  • 3. You might receive a lower rate. Paying less interest is a primary objective of refinancing. If your income or credit score increased after you first agreed to your existing auto loan, you might be eligible for a lower APR. Your credit score is available to view here.