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4 min read Published January 04, 2023.
Written by Allison Martin Written by
Allison Martin’s work started over 10 years ago as a digital content strategist. She’s been published in numerous prestigious financial publications such as The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to manage their finances with clear, well-researched facts that break down complicated subjects into digestible pieces.
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You’ve refinanced your car a short time ago to get an affordable monthly cost however, you’re now curious to know the frequency you can refinance your car if you can find a lower rate. Perhaps you’re thinking about an initial refinance , and are wondering if you’ll be able to later refinance. In either case, it might be a wise financial decision. You must understand the benefits and drawbacks and conditions to refinance prior to proceeding. You may find that other options that don’t involve refinancing are better. How many times you can refinance a vehicle? If you’ve already , you’re able to do it again. There’s actually no legal limit on the number of times you are able to refinance if you’re able to locate an lender willing to help you with the transaction. “Vehicle refinancing is not limited to the age and value of your vehicle” claims Christina Naylor, chief operations officer at Carolina Trust Federal Credit Union. However, after refinancing several times, you might have a harder time trying to obtain the new auto loan with competitive terms. Some lenders view steeper terms as the chance of default is higher. “The issue is why do they keep refinancing?” Naylor says. “Are they using the money or equity to pay down debts that are revolving and then immediately racking up the credit card balances once more? This is a risk to the lender and it’s a bad option for the person who is borrowing.” How soon can you refinance your car? There’s no legal requirement specifying the time frame to refinance. If the lender is willing to refinance your loan shortly after it’s been funded then you may be in good hands. Still, it may not be the best choice for your finances, especially if you’re considering a refinance when the depreciation rate has reached its peak early in the vehicle’s lifespan. Why you may not want to do more than one refinance However , there are situations where refinancing more than once isn’t sensible. You may face a prepayment penalty. Your current lender may charge you for paying the loan off in advance. The fees are accumulating. There are also loan creation and title transfer costs which are typical for refinancing transactions. These expenses can be a lot when refinancing multiple times, along with the additional interest you may pay if you decide to extend the loan term. There is a chance that you will have to pay more than the vehicle is worth. Another important consideration of refinancing more than once is the impact on depreciation. In general, refinancing more than once can cause you to be liable for more than the car’s worth that is described as being . This could be a problem if you plan to sell your car before it’s paid off or if your vehicle is non-functional. It could damage the credit rating. Credit inquiries linger over your report of credit for upto two years, but only impact your score for 12 months. If you make more than once in an extremely short time, the additional inquiries may have a slight impact . Refinancing needs to meet certain requirements Lenders generally have requirements that you have to meet in order to refinance your car for refinancing, such as age The majority of lenders will insist that your vehicle is not more than 10 years old. If you’re refinancing a third, second, or even the fourth time, your vehicle’s age may exceed the limit and make it unsuitable to refinance. Value: The car should never be valued less than what the amount you are obligated to pay for the loan. It’s easy to get upside-down on your auto loan If you have to refinance more than once which can be a problem for some borrowers. Mileage The majority of lenders limit car mileage to 100,000 or 150,000 miles when refinancing. If you’ve had the car for a long time and you’ve accumulated far more miles than the lenders will allow. How do I make sure I am getting the best rate when I refinance my car loan? Refinancing your vehicle can result in big savings, so it’s crucial to research to ensure you’re getting the best deal possible. The first step should be to look over your current auto loan. Review the loan conditions, such as the your interest rates and loan duration. Also, look into your credit rating to see if it’s higher than it was when you made your application for the current loan. It may be beneficial to refinance at the credit union or bank that you already hold an account. This could increase your chances of being approved and you could be able get a lower rate due to your relationship to the lender. You should also look at interest rates and terms from different lenders, like banks and online lenders. If you can, do this prior to making a full application. This can help you better evaluate loan offers and could increase your chances of getting approval. Once you’ve narrowed the options make use of an online tool to compare the loan offers. Pay attention to any penalties or charges for prepayment. You should ensure that the savings exceed any costs related to refinancing. How can you lower your monthly payments If you would like to, but feel that refinancing isn’t the right choice, look at these options Modify your loan. Call your lender and ask to someone in the department of loss mitigation to . Let the representative know of your financial situation and inquire about options to make your auto loan less expensive and to avoid repossession. Switch your vehicle to one that’s less expensive. Explore the inventory at local dealers and make a a list of vehicles with lower prices and monthly payments that won’t stretch your budget too thin. To narrow down your options, visit the dealership and negotiate a deal that gets you a for and the vehicle you buy. Sell your vehicle privately. You can get top-dollar for your car doing it yourself. Once the transaction is complete you can use the funds to finance a downpayment on a new or used vehicle. Remember that the current new car shortage has , so it might take some time to locate the ideal vehicle at an attractive price. If your credit rating has improved since you obtained your vehicle loan or you have already refinanced before and want better loan conditions and a lower monthly installment, you could consider a second chance at refinancing. But before you move forward make sure that the benefits outweigh the cost. Also, research lenders to find the best deals to get the most value for your money. If not, think about modifying your existing loan to obtain the best deal, if refinancing doesn’t make financial sense. You could also consider trading your vehicle in or sell it privately if refinancing doesn’t make the most beneficial option for you. Find out more
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Written by
Allison Martin’s work started over 10 years ago as a digital content strategist, and she’s since been featured in a variety of top financial media outlets, including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain the confidence to control their finances by providing precise, well-studied facts that break down otherwise complex subjects into digestible pieces.
Auto loans editor
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