Sometimes well after you're done buying the car you want you might want to refinance your car loan. Refinancing your car loan means replacing your current car loan with a new loan from a different lender. Refinancing gives you an opportunity to save money by getting a new loan with terms that work better for you, whether that’s a lower interest rate and/or lower monthly payments.
There is no minimum amount of time you need to wait before you can refinance. In fact, you can refinance before making your first payment on your current loan. However, there are a few indicators of when is a good time to refinance your auto loan:
If you’ve had your car for a few months now and you’ve been making all of your payments on time, chances are that your credit score has improved. This might be a good time to consider refinancing to get a better interest rate.
Changes in the economy, competition in banking and new regulatory changes, among other factors can contribute to dwindling interest rates. You can take advantage of those low-interest rates and refinance your vehicle.
If you got your existing loan through your car dealer, there’s a chance that your dealer might have charged you a higher interest rate than you would have qualified for somewhere else. Now that you’ve done a little research, you know you can qualify for a much better interest rate. This might be a good time to refinance.
Maybe you got too excited at the dealership or are facing a financial hardship and now you’re struggling to make your payment every month. You can consider refinancing for a longer term in order to lower your monthly payment. You’ll pay more interest over time, but lower monthly payments might work better for you current financial situation.
Why isn’t everyone refinancing? That’s a good question. There’s no reason to not try to get a better car loan. It may take a little time and your credit might take a slight hit while applying for a new loan, but overall getting better terms and saving money on your car is usually worth it.
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