Rules of Thumb on When to Refinance a Car Loan
- Wait at least 60-90 days from getting your original loan to refinance.
- Consider refinancing after six months.
- If you are a first-time car loan borrower, wait at least a year to refinance your loan.
Is it a good idea to refinance a car?
When It’s a Good Idea to Refinance
There are several situations in which it may be beneficial to refinance your car loan. One is if you’re trying to take advantage of lower interest rates. Doing so will lower your payment, but most importantly, it will decrease the amount of interest you have to pay on the loan.
How does it work when you refinance your car?
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.
Does Refinancing a Car hurt your credit?
When you apply to refinance your car, a hard inquiry will be noted on your credit, causing a temporary dip in your score. A car loan refinance also might hurt your credit by reducing the average age of your accounts. That’s because your original car loan will be paid off early and replaced by a new auto loan.
Photo in the article by “George W. Bush White House”