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4 min read Published January 04, 2023
Written by Allison Martin Written by
Allison Martin’s work began over 10 years ago as a digital content strategist, and she’s since been published in several leading financial media outlets, including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers to manage their finances with precise, well-studied facts that break down otherwise complicated subjects into digestible pieces.
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You refinanced your car some time ago to get an affordable monthly cost and now you’re interested to find out how often you can refinance your car if you can find a lower rate. Maybe you’re considering an initial refinance and wonder if you’ll be able to refinance in the future. Either way, it could be a wise financial decision. You must understand the advantages and disadvantages of refinancing as well as the requirements for refinancing prior to proceeding. You may find that other alternatives that don’t require refinancing are better. How many times could you refinance a car? If you’ve already done it, you can do it again. In fact, there’s no legal limit to the number of times you can refinance if you’re able to locate a lender willing to assist you with the transaction. «Vehicle refinancing is not limited to the age and value that the car is worth,» claims Christina Naylor the chief operating officer of Carolina Trust Federal Credit Union. If you refinance several times, you may find it more challenging to get an auto loan with terms that are competitive. Some lenders view steeper terms as the risk of default is higher. «The issue is why do they keep refinancing?» Naylor says. «Are they using the equity or cash to pay down debts that are revolving and then immediately racking up the credit card balances again? It’s a risk for the lender and it’s a bad option for the borrower.» When can you refinance a car? There is no legal requirement that specifies a particular waiting period for refinancing. If you find that a lender will be willing to refinance your loan within a short time after it’s been financed then you may be in good hands. Still, it may not be a smart financial choice, particularly in the event that you’re looking to refinance in a time where the depreciation percentage will be at the highest early in the car’s life. Why you may not want to refinance more than once But there are instances where refinancing more than one time isn’t sensible. You may face a prepayment penalty. Your current lender might charge you for paying the loan early. Costs can will add up. There are loan creation and title transfer costs, which are standard with refinancing transactions. These costs can add up when refinancing multiple times, along with the additional fees you might have to pay when you extend the loan time. There is a chance that you will be liable for more than your car is worth. One of the most important aspects to consider when refinancing several times is the impact on depreciation. It is common to refinance more than once and causes you to be liable for more than what the vehicle is worth, which is referred to as being . This could be a problem if you want to sell or trade your vehicle prior to the time you pay off your loan or if your vehicle becomes non-functional. It could damage your score on credit. Credit inquiries linger on your credit report for up to 2 years, however they will only affect your score for a period of 12 months. If you make more than once in an extremely short time there is a chance that the subsequent inquiries will be affect your credit score . Refinancing conditions Lenders generally have requirements you need to follow in order to refinance your vehicle for refinancing, such as age Most lenders require that your car is at least 10 years old. of age. However, if you’re refinancing a third, second, or even fourth time, your car’s age could exceed the maximum which means it is not eligible to refinance. Valuation: The car must not be worth less than what you have to pay on the loan. It’s not difficult to go upside down in your auto loan if you refinance more than once and this can cause problems for certain borrowers. Mileage Limits for vehicle mileage to 150,000 or 100,000 miles for refinances. If you’ve owned the vehicle for some time, you may have accrued more miles than the lenders permit. How do I make sure I’m getting the best rate for refinancing the car loan? Refinancing your vehicle can result in big savings, so it’s essential to compare rates to ensure that you’re getting best deal possible. The first step is to take a look at the current car loan. Review the loan conditions, including the your interest rates and loan length. Also, look into your credit rating to see if it’s higher than it was at the time you were applying for your current loan. It might be beneficial to refinance with a bank or credit union that you already are a member. This may improve your chances of getting approval, and you might be able get lower rates due to your relationship with the lender. It is also important to compare the rates and terms of various lenders, including banks, and online lenders. If possible, prior to making a full application. This will allow you to better compare loan offers and could increase your chance of getting approved. Once you’ve narrowed the options you can use an application to evaluate the loan options. Pay close attention to the prepayment penalties and fees. You should ensure that the savings exceed any expenses associated with the refinance. How to lower the cost of your monthly payments If are considering refinancing but you find that refinancing isn’t a good fit, consider these alternatives: Modify your loan. Make contact with your lender and ask to speak to someone in the loss mitigation department . Let the representative know that you’re facing financial difficulties and inquire about options to make your car loan less expensive and to avoid repossession. Change your car to one that’s less expensive. Check out the available inventory at local dealerships and make a list of vehicles with lower prices and monthly payments that don’t stretch your budget too thin. Narrow down your list of options go to the dealership, and negotiate a deal that gets you a price and the car you purchase. Sell your vehicle privately. You can get top-dollar for your car by selling it on your own. Once the transaction is complete then use the money to make a down payment for a used or new vehicle. Remember that the current new car shortage has , so it might take some time to find the ideal vehicle at an attractive price. Next steps Whether your credit score has improved since taking out your vehicle loan or you have already refinanced before and are looking for more favorable loan terms and a less monthly payment, you can consider a second chance at refinancing. However, before moving forward, ensure the benefits outweigh the cost. Also, research lenders to find the most favorable offers to make the most of your dollars. If not, think about modifying your existing loan to secure a better deal in the event that refinancing isn’t financially sense. It is also possible to trade your vehicle in or trade it in privately if refinancing isn’t the ideal choice for you. Learn more
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Written by
Allison Martin’s career began more than 10 years ago as a digital content strategist, and she’s since been published in several leading financial outlets including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com.
Editor: 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 take control of their finances by providing precise, well-studied information that breaks down complex topics into manageable bites.
Auto loans editor
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