Refinancing is meant to help you lower your monthly auto loan payments, or give you longer to pay for a vehicle you love. While there's technically no limit to how many times you can do this, it may not be wise, or possible to do it more than once. Here's a look at why that may be the case if you have a car loan.
Why refinance in the first place? If you have a car you want to keep, but the terms of your loan aren't what you're looking for, refinancing can help. It makes the most sense to refinance if you need a little wiggle room in your budget.
The best way to do this is to try to refinance to a loan with a lower interest rate. Lowering your interest rate means paying less each month, and saving in overall interest charges. But, a lower interest rate isn't the only way to achieve a lower monthly payment. You can also get this by qualifying to refinance for a longer loan term. Keep in mind though that while this lowers your monthly expense, it doesn't save you overall unless you have a lower interest rate too.
Refinancing more than once may not help. If you already refinanced your car, you know that your credit situation must be good or improved to qualify, and your loan and vehicle both need to fit within the lender's parameters. What you may not know is that you generally need to wait to be eligible for refinancing – usually for at least one to two years after getting a loan.
This could put your vehicle at risk of falling outside the refinancing qualifications, either with age or accumulated mileage. If you know your vehicle is still good, consider your financial situation. Are you just barely eking by with your current auto loan payment? If this is why you need to refinance again it could be a sign to a lender that you're overextended – not something that will help your chances of refinancing.
Also consider this: if you already extended your loan term you're at risk of paying more for a car than it's worth. So if you stretch that payment out farther, you're only paying even more for a vehicle that might not be holding enough value to make that a good investment.
Try a trade-in instead. If refinancing a second time isn't for you, now might be a great time to cash in on that vehicle you can no longer afford. With the scarcity of new and used vehicles right now, some dealers are willing to pay top dollar for quality trade-in vehicles. This means your car could be worth more than it might be when the market is flush with cars. Right now, cars are going for more than MSRP, and discounts are harder to find. Having a good trade-in can be a big bargaining chip in getting a more affordable car.
Ready to try refinancing again? If you still think that refinancing is the way to go, we want to help. Here at Auto Credit Express, we work with a large network of refinancing specialists who are ready to help. Simply fill out our fast free auto loan refinancing request form to get started.