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Westend61/Getty Images October 20, 2022 Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our loans reporters and editors focus on the points consumers care about most — the different types of lending options, the best rates, the best lenders, how to pay off debt and more — so you can feel confident when investing your money. Bankrate logo Editorial integrity
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Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. swaps your current loan with a new one. You could get a lower interest rate and shorter or longer term than what you currently have. But opting for a longer repayment period on a new loan could make you feel like you’re starting from scratch. Most consumers refinance to save money. However, refinancing may not be a complete solution if you have a larger financial problem. How refinancing restarts your car loan
If you decide that refinancing your loan is the best financial option for you, the new terms offered could make your monthly auto loan payments more affordable. However, you want to be mindful of the loan term you choose to avoid the feeling of “restarting the loan” even if you’ve been making payments for some time. Ideally, you can avoid adding too many additional payments to pay off the balance by choosing a term that is the same or shorter than the remaining term on your current loan. So, if you have 36 months remaining on your loan, you would refinance to a 36-month loan. This will prevent you from paying additional interest. And, with a lower interest rate, your payments should also be lower. But refinancing may not be beneficial if you have less than 24 months remaining on your auto loan. You’ll generally pay the most interest in the first few years of the loan, minimizing the potential cost savings you’d get if you refinance towards the end of the repayment period. How refinancing affects your loan term
The most common terms drivers are met with when financing a vehicle range from 24 to 84 months. The , the lower your monthly payment will be. But with a longer loan, you could be stuck paying hundreds of dollars more in interest than you would with a shorter loan. Although you can get a different interest rate as well, the term change will be the main factor in whether or not you effectively “reset” your loan. The term can be shortened or made longer — and the right choice depends on your budget. To best determine your ideal term length, take advantage of an to find the one that will best balance the money saved and monthly payments you can afford. When it s a good idea to refinance your car loan
There are a few primary scenarios where it is a your car loan. You’re struggling to afford monthly payments. Refinancing and reworking your current loan’s terms can give you more time to pay off your vehicle or a lower rate. But you may be able to from your current lender without refinancing. Your since taking out the current loan. Better credit will mean more favorable terms. This is especially true if you originally financed through a car dealership. You financed your current loan with the dealership. If you used , you could be eligible for better loan terms with an outside lender. Check to see how much you could potentially save with lower . If you decide to refinance, read the purchase agreement or reach out to your current lender to confirm they don’t for paying off the loan early. Otherwise, you could incur a sizable fee that outweighs the benefits of refinancing. How to refinance your car loan
If you determine refinancing is right for you, to take. Reflect on your current loan and organize the paperwork for your new loan application. Review your current loan. Find the interest rate, payoff amount, months remaining and information about any fees or penalties. Check your credit. Make sure your credit score is in good enough shape to get a decent rate. Check your credit report for errors at the same time. Compare lenders. Don’t go with the first lender that offers a decent rate. Review several, including their eligibility criteria, penalties and what rates and terms you prequalify for. Apply for refinancing. Once you decide on a lender, apply online or in person. From here, the lender will let you know if you qualify and how the rest of the process will work. The bottom line
You’ll start from scratch with a new auto loan when you refinance and potentially get a lower monthly payment or . But before applying, consider the risks that come with refinancing. Look for other ways to save money if refinancing isn’t the best move for your financial situation. SHARE: Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites.