How Long Should You Wait to Refinance your Car Loan if your Rate is High?


The back office of the car dealership is the wrong place to get an auto loan: car dealers charge over $1,700 on average in undisclosed markups and fees! Let’s say you already got your loan, though – how soon can you refinance your car loan online to reduce your auto interest rate or lower your monthly car payments?

Learn more about markups – and see how much you might have paid – with our Outside Financial Markup Index.

The short answer? You can refinance your car loan at any time during the life of the loan, and the sooner you refi, the sooner you start saving.

There’s no minimum – or maximum – amount of time you need to wait before refinancing. You don’t even have to make the first payment to your existing lender. (Just make sure you don’t miss that payment accidentally. Auto lenders focus on whether you’ve made your car loan payments on time when deciding whether to lend to you and how much). The sooner you refinance to a better loan, the sooner you start saving. Refinancing a loan secured by a newer car usually means you’ll get a better interest rate too; auto interest rates on newer cars are typically lower than for older cars. Many lenders also have a cut-off for vehicles over a certain age or for those that have driven over a certain number of miles.


Will car refinancing save me money?

The best way to figure out whether or how much you can save by refinancing your car loan is to see what auto loan rates you pre-qualify for – without affecting your credit. But there are a few watch-outs you should be aware of before refinancing your car loan:

  • Pre-payment penalties: Most auto lenders don’t charge prepayment penalties, but make sure yours isn’t one of them. If yours does, you need to calculate whether those fees will cost you more than you’d save with a new loan.

    1. Longer loan terms: At Outside Financial, we show you a lot of options because we want you to decide what’s best for you and your budget. Often, the lowest monthly payment will be for a loan with a longer term because you’re spreading your repayments over a longer period of time. Longer-term loans often carry a higher APR than shorter-term loans. Only you can decide what’s right for you, but we advise most customers to choose the lowest APR with monthly car payments they can afford.

    2. Ancillary products: If you purchased a GAP waiver policy with your original loan, it will not automatically carry over into a new loan. If you still want GAP coverage (and at Outside Financial, we think it can be a smart choice, if you buy it for the right price), you will need to explore your options for a new policy.

How Do I Know if Refinancing is Right for Me?

The best way to figure out whether an auto refinance is right for you is to pre-qualify. We’ll show you loan offers from our network of trusted lenders, without affecting your credit or inundating you with robocalls and spam emails. If you can save money by refinancing to a better car loan, you can choose to apply.

Read More Like This….

RefinanceJon F