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Can refinancing trigger your auto loan over? Part Of Refinancing a Car Loan In this series Refinancing a Car Loan Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial choices by offering interactive financial calculators and tools that provide objective and original content. This allows you to conduct research and compare information for free to help you make sound financial decisions. Bankrate has agreements with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Profit The products that appear on this website are provided by companies that compensate us. This compensation may impact how and where products appear on this site, including for instance, the order in which they may appear in the listing categories in the event that they are not permitted by law for our mortgage home equity, mortgage and other products for home loans. This compensation, however, does affect the information we publish, or the reviews that you read on this site. We do not cover the universe of companies or financial offers that may be available to you. Westend61/Getty Images

3 minutes read. Published 20th October, 2022

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

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They ensure that what we write is objective, accurate and trustworthy. The loans journalists and editors concentrate on the areas that consumers are concerned about most — the different types of lending options, the best rates, the most reliable lenders, how to pay off debt and many more — so you can feel confident when making a decision about your investment. Editorial integrity

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There are money-related questions. Bankrate has answers. Our experts have helped you understand your money for more than four years. We are constantly striving to give consumers the professional advice and tools needed to succeed throughout life’s financial journey. Bankrate adheres to a strict code of conduct policy, which means you can be confident that our content is truthful and accurate. Our award-winning editors and reporters provide honest and trustworthy content to help you make the right financial choices. Our content produced by our editorial staff is objective, truthful and uninfluenced by our advertisers. We’re transparent about the ways we’re in a position to provide quality information, competitive rates and helpful tools to you , by describing how we earn our money. is an independent, advertising-supported publisher and comparison service. We are compensated for the placement of sponsored products and, services, or through you clicking specific links that are posted on our website. So, this compensation can affect the way, location and in what order products are listed and categories, unless it is prohibited by law for our mortgage and home equity products, as well as other products for home loans. Other factors, such as our own proprietary website rules and whether the product is available in your area or at your own personal credit score could also affect how and where products appear on this site. Although we try to provide an array of offers, Bankrate does not include information about every credit or financial product or service. You can swap your current loan to a new one. It could result in an interest rate that is lower and a shorter or longer terms than the one you have currently. If you opt for a longer repayment period on a new loan could cause you to feel as if you’re beginning from scratch. Most consumers refinance in order to cut costs. However, refinancing may not be a complete solution if you have an even bigger financial issue. How refinancing restarts your car loan In the event that you choose that refinancing the loan is the best solution for you financially and the terms that are offered can make your monthly loan payment more affordable. But, you must be mindful of the loan term you choose to avoid the fear of “restarting your loan” even in the event that you’ve been making monthly payments for a long time. Ideally, you can keep from making too many payments to settle the balance by choosing a loan term that is similar or shorter than the remaining time on your current loan. If, for instance, you have 36 months remaining on your loan then you could refinance to a 36-month loan. This will stop you from paying additional interest. And, with the lower rate of interest, your payments should also be lower. However, refinancing might not be advantageous if you have less than 24 month remaining on your auto loan. You’ll generally pay the most amount of interest in the initial year of the loan and will limit the savings that you could earn if you refinance towards the end of your time frame for repayment. What effect does refinancing have on the duration of your loan duration The most frequent terms drivers are met with when financing a car. The terms vary between 24 and 84 months. The , the lower your monthly payment will be. If you take out a longer loan you could end up forced to pay several hundred dollars more in interest than with a shorter loan. Although you can obtain a different rate of interest also, the term change will be the main factor in whether or not you effectively “reset” the terms of your loan. The term can be shortened or made longer — and the best choice is contingent on your financial situation. To figure out your ideal length of time, make use of an opportunity to determine the best one to balance the money saved and monthly payments you can manage. When it’s a good idea to refinance your vehicle loan There are a few situations in which it’s an automobile loan. It’s difficult to make monthly payments. Refinancing and reworking your current loan’s terms can provide you with more time to repay your vehicle or at a lower rate. You may also be able to get a loan from your current lender with no refinancing. The reason you are using the current loan. A better credit score will result in more favorable conditions. This is particularly true if you initially financed your loan through the car dealer. The financing for your current loan with the dealership. If you made use of the dealership , you could be eligible for better loan terms from an outside lender. Find out the amount you can save with lower . If you decide to refinance, read the purchase agreement or call your current lender to verify that they aren’t have any requirements to repay the loan early. In the event that you don’t, you may be charged a sizable fee that outweighs the advantages of refinancing. Refinancing your car loan If you determine refinancing is right for you, to take. Consider your current loan and organize the paperwork for the new loan application. Examine your current loan. Check the rate of interest, the payment amount, months remaining as well as information on any penalties or fees. Verify your credit. Check to see if the credit rating is good enough in order to be able to obtain a good rate. Verify your credit score for any errors at the same time. Compare lenders. Don’t choose the first lender which has a good rate. Check out several lenders, including their eligibility criteria or penalties and the rates and terms you are eligible for. Apply for refinancing. Once you decide on a lender you can apply either online as well as in person. The lender will inform you if you qualify and how the rest of the process will go. The final result is that you’ll begin fresh with a brand new auto loan by refinancing and potentially obtain a lower monthly rate or . But before you make a decision, take into consideration the potential risks associated when refinancing. Find other options to save money, if refinancing isn’t the best move to take based on your budget.


This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the details of borrowing money to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to take control of their finances with concise, well-studied information that breaks down otherwise complicated subjects into bite-sized pieces.

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