If you got a car loan and you want to lower your monthly payment right away, it may not be an option. Refinancing has requirements, and your credit score plays a part, too.

Just Got a Car Loan?

If you’re unhappy with the terms of your auto loan, refinancing could be the solution. However, if your car loan is less than one year old, it may not be possible. Most auto lenders don’t refinance car loans right away – typically within 12 months of purchase is when it becomes an option.

If you need to refinance an auto loan right away, or within one year of getting it, you generally need to do some legwork to find a lender that’s willing to refinance your loan early. And to refinance a car loan right away, you’re likely to need a good credit score.

If your credit score is so-so or worse, then expect to wait at least one year before you qualify for refinancing.

How Does Refinancing an Auto Loan Work?

Can You Refinance a Car Loan Right Away?Refinancing is replacing your auto loan with another one on the same vehicle. The refinancing lenders pays for your current loan, and gives you a new contract with a different interest rate and/or terms.

The goal with refinancing is almost always to lower your monthly payment by either extending your loan term or lowering your interest rate (sometimes both). If you just extend your loan term and keep your current rate, you pay more in interest charges. If you keep the same loan term and lower your interest rate, it saves you money in the long run. If you qualify for both, you may or may not save any money on interest charges – it depends on the terms.

Most borrowers look for another lender to refinance their car loan. You may be able to refinance with your original lender, but it’s not the most common route.

What Are the Requirements to Refinance My Car Loan?

Besides your auto loan being at least a year old, there are a number of other refinancing requirements. The specifics vary by lender, but we have some common stipulations so you can have an idea of what to expect:

  • Vehicle is less than 10 years old
  • Car's mileage is under 100,000
  • Good credit, or your credit score has improved since the start of the loan
  • Your vehicle’s value is equal to or greater than the loan balance
  • No late or missed payments
  • Loan balance isn’t too high or too low (exact amounts vary by lender)

If you’re ready to jump for refinancing, we want to help you find a refinancing lender. Click here for more information.

If you, your car, or your loan isn’t eligible for refinancing, then it may be time to sell the vehicle.

Want Another Auto Loan?

If you’re struggling to make payments, or you simply want different loan terms but don’t qualify for refinancing, selling the car may be the next option.

You don’t have to wait until you’ve completed your auto loan to get another vehicle. In fact, trading in your current ride for another is a very common practice. If you take your car to a dealer, any equity that you have in your auto loan can be put toward your next vehicle purchase, acting as a down payment.

When you take your car to a dealership as a trade-in, the dealer appraises it and gives you an offer. The key to successfully trading in your vehicle is making sure your offer is high enough to cover your remaining loan balance.

If you don’t get a high enough offer, you must pay the remaining balance. Once you pay off the loan, the lender removes the lien and transfers the title to the new owner of the car.

Selling the vehicle is one thing – getting approved for another auto loan is its own mountain to climb. If you have poor credit, qualifying for a car loan can be difficult. But there are lenders that can help those with damaged credit.

Bad Credit Car Dealerships

Dealerships that are signed up with bad credit auto lenders are called special finance dealers. Called subprime lenders, they examine more than your credit rating for financing eligibility. These lenders specialize in assisting borrowers with challenged credit.

If you have the ability, stability, and willingness to make a down payment, then you may qualify for a subprime car loan! To get connected to a dealership with these resources, fill out our free auto loan request form. Auto Credit Express has amassed a nationwide network of dealers, and we’ll match you to one in your local area. The process is fast, and there's never any obligation, so get started now!