Refinancing a car loan involves taking on a new loan to pay off the balance of your existing car loan.
People generally refinance their auto loans to save money, as refinancing could score you a lower interest rate.
As a result, it could decrease your monthly payments and free up cash for other financial obligations.
When should you refinance your car loan?
When you can replace your existing loan at a lower rate, it’s best to refinance as early as possible. Most auto loans are amortizing loans, which means you pay a fixed monthly payment with interest costs built into the payment.
Should I refinance my car payment?
If you’re struggling with a high interest rate or an unaffordable monthly payment, refinancing could be the key to finding better, more favorable terms. Refinancing your auto loan could help lower your monthly payments by lengthening the term of your repayment.
Is refinancing a car loan bad for your credit?
There are several good reasons for refinancing car loans that can even help your credit score in the long run. A new loan with a better interest rate and terms can enable you to more quickly and easily pay off your car loan. Consider applying for a new car loan if you want to: Lower monthly payments.