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Common car refinancing mistakes to avoid Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial decisions by providing you with interactive financial calculators and tools that provide objective and unique content. We also allow you to conduct your own research and compare data for free to help you make financial decisions with confidence. Bankrate has partnerships with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies that pay us. This compensation may impact how and where products appear on the site, such as for instance, the order in which they may appear in the listing categories, except where prohibited by law. Our loan products, such as mortgages and home equity, and other home loan products. This compensation, however, does have no impact on the information we provide, or the reviews appear on this website. We do not contain the universe of companies or financial offerings that could be available to you. Tom Werner/Getty Images

3 min read Published February 24, 2023

Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ways and pitfalls of borrowing money to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are committed to helping readers gain confidence to control their finances through providing concise, well-researched and informative information that breaks down otherwise complicated subjects into digestible pieces. The Bankrate promise

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At Bankrate we strive to help you make better financial decisions. While we adhere to strict ethical standards ,

this post may contain some references to products offered by our partners. Here’s how we make money . The Bankrate promise

Founded in 1976, Bankrate has a long track experience of helping customers make wise financial decisions.

We’ve maintained our reputation for more than four decades through demystifying the financial decision-making

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You can rest assured you can trust us to put your needs first. All of our content is created with and edited ,

who ensure everything we publish is objective, accurate and trustworthy. Our loans reporters and editors are focused on the points consumers care about most — various types of loans available as well as the best rates, the best lenders, how to pay off debt and many more — so you’re able to be confident about making your decision to invest your money. Integrity of the editing

Bankrate adheres to a strict code of conduct , so you can trust that we’ll put your needs first. Our award-winning editors and journalists create honest and accurate content that will help you make the right financial decisions. Key Principles We value your trust. Our mission is to offer readers truthful and impartial information. We have standards for editorial content in place to ensure that happens. Our reporters and editors thoroughly fact-check editorial content to ensure that the information you’re reading is correct. We keep a barrier between advertisers as well as our editorial staff. Our editorial team doesn’t receive any direct payment through our sponsors. Editorial Independence Bankrate’s editorial team writes on behalf of YOU the reader. Our goal is to give you the most accurate advice to help you make smart personal finance decisions. We adhere to strict guidelines in order to make sure that the content we publish isn’t influenced by advertisers. Our editorial staff receives no direct compensation from advertisers, and our content is thoroughly verified to guarantee its accuracy. Therefore, whether you’re reading an article or reviewing it is safe to know that you’re receiving reliable and dependable information. How we make money

If you have questions about money. Bankrate has answers. Our experts have been helping you master your money for over four years. We continually strive to provide consumers with the expert advice and tools needed to make it through life’s financial journey. Bankrate adheres to a strict code of conduct standard of conduct, which means that you can be sure that our content is truthful and accurate. Our award-winning editors, reporters and editors produce honest and reliable content to help you make the right financial choices. Our content produced by our editorial team is factual, objective and uninfluenced by our advertisers. We’re transparent regarding how we’re in a position to provide quality information, competitive rates and useful tools for you by explaining how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products or services, or through you clicking certain hyperlinks on our site. So, this compensation can affect the way, location and when products appear in listing categories, except where prohibited by law. We also offer mortgage or home equity products, as well as other products for home loans. Other factors, like our own website rules and whether a product is offered in your area or at your self-selected credit score range can also impact the way and place products are listed on this site. While we strive to provide an array of offers, Bankrate does not include the details of every credit or financial item or product. If you’re having difficulty making your current loan payments, — swapping the current auto loan with a brand new one — can be a great option to save money while you continue to drive your car. However, there are a few common mistakes to avoid to ensure you don’t find yourself in another financial bind. The top seven mistakes in refinancing your car Avoid these common mistakes when refinancing your car loan. 1. Do not check refinancing requirements. Lenders have specific requirements regarding refinancing. Check for requirements pertaining to the car’s mileage, age and the amount you have left in the loan. For example, lenders often require at least six months’ worth of payments on your loan and a remaining balance of between $3,000 and $5,000 to refinance. Bankrate tip

You can find refinancing requirements from banks’ websites as well as Bankrate’s .

2. Not checking with your current lender initially. Although your current lender might not offer the lowest rates, it is still the best place to begin. Before you look into refinancing options that aren’t offered by your current lender It is recommended to approach them and discuss your situation with them to see if they can help. Certain lenders provide this service , that alters the conditions, the payment due date or interest rate to give borrowers financial relief. Bankrate tip

Even if you still follow through with refinancing the loan It is possible that they’ll offer an offer that is better than what the new lender might.

3. Intending the loan time too much. The purpose of refinancing is to save money, but should you extend the term of your loan too much and you are spending more money over the loan’s lifetime. While a will mean the payment will be lower but you’ll also be paying more interest. Tips from Bankrate

Prior to term adjustment, take advantage of auto refinances to ensure you save money.

4. Not considering your credit As with most cases regarding financing, your credit score serves as the main factor for approval. Thus, improve it and before you refinance your loan. You’re more likely to get the loan you want and walk away with a better loan overall. If your credit score is 670 or greater usually qualifies for borrowers with the most favorable interest rates. Bankrate tip

Check your credit ahead of loan applications by using AnnualCreditReport.com.

5. Only shopping with only one lender Similar to when you are shopping for your first auto loan, we recommend comparing at least three different lenders. While deciding on the initial loan offer may be tempting, not all lenders are created to be equal. The lower the interest rate, the less you’ll pay for your car payment. You need to ensure that you’re getting the best deal available. Tips for Bankrate

Compare current rates that are offered by a variety of lenders. Pay attention to eligibility requirements, repayment options and how they compare to what you currently have on your loan.

6. Becoming upside down on your loan Before refinancing, make sure you know whether the equity on your vehicle lies with an . Equity is the sum by which the value of the car is higher than the amount that you owe on the auto loan. If you are owed more than your car is worth or have negative equity, refinancing is likely not a good idea. Bankrate tip

Don’t make a deal to refinance a vehicle that you aren’t able to afford. Find out where you may be overextending and calculate expected costs prior to signing an additional loan.

7. Giving up after your first rejection Auto loan refinancing requirements differ from lender to lender, so just because you were rejected by one lender doesn’t mean that you’ll be rejected by all. If you’re wondering, “Why can’t I refinance my vehicle?” you have the right to question your lender in accordance with the (ECOA). They have to explain why the application was rejected. Bankrate tip

Knowing why you were denied will help increase your odds of approval in the future. For example, if you have a credit score that is too low You can work towards improving it before applying next time.

The bottom line While refinancing your vehicle loan could be risky, it is a great method to cut down on the cost of your monthly payments and keep paying for your car. Keep these common mistakes in mind and be up-to-date with current information for you to be sure you leave with the right loan for your requirements.

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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers to navigate the ins and outs of securely borrowing money to purchase a car. Edited 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 control their finances with clear, well-researched information that breaks down otherwise complicated topics into digestible pieces.

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