How Many Times Can I Refinance My Car Loan? See How I Did Mine


If you’ve taken a car loan and you’re having financial struggles or finding a means to lower your car payment, you can consider refinancing it to lower your interest rate and reduce your monthly payment. 

Refinancing a car loan means using a new loan to pay off the balance of an already existing car loan. By refinancing, you not only get better loan terms but also get extra cash as your budget is freed up with the decreased monthly payment.


How Many Times Can I Refinance My Car Loan?


How Many Times Can I Refinance My Car Loan?


There’s no specific limit to how many times you can refinance your car loan. You can refinance your car loan as often as you desire; there are no legal restrictions. The only factor affecting your car loan refinancing is finding lenders who want to lend you the money. 


While some lenders are flexible, some are very strict, and once they see that you’ve refinanced your car loan several times, they won’t want to consider you. However, before refinancing your car loan again, there are certain questions you should ask yourself. The questions are:


  • Do I Qualify For Refinancing?

Qualifying for an auto refinancing takes on the same process every time you apply; the lenders will ask the following questions:


  • How old is your car?
  • How many miles does it have?
  • What’s the amount of money left on your car loan?


Generally, lenders require that your car is less than ten years old and has less than 100,000 miles on it, and if your loan takes less than a year to pay off, there’s a high chance that you won’t qualify for the auto refinancing.


  • When Was The Last Time I Refinanced?

Although there’s no specified time to refinance again, to increase your chances of getting approved by a lender, it’s highly recommended to take 6 to 12 timely monthly payments with your current lender before you refinance. 


This will not only prove to your new lenders that you’re a good candidate to take on, but it will also boost your credit score as payment history makes up an important portion of your credit score.


  • Is It Time For Me To Refinance Again?

Some conditions will determine whether it’s time for you to refinance again or not. You can refinance your car loan again if you’re finding it difficult to make your monthly payment, if you get a better interest rate and if you want to change a cosigner. 

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But don’t consider refinancing if there are huge prepayment penalties, if you have less than a year to pay off your loan balance and if you owe more on the car than it’s worth.


  •  How’s Refinancing Impacting My Credit? 

Before applying for refinancing again, it’s better to understand its effect on your credit. Every time you refinance, a hard inquiry reduces your credit score, and opening a new auto loan account will decrease the average age of your accounts and lower your credit score.


However, those two factors are less significant in the calculation of your credit score, but if you refinance to be able to make a full and timely monthly payment, then in the long term, you’re increasing your credit score.


How Can You Tell If Auto Refinance Companies Are Reliable?


How Can You Tell If Auto Refinance Companies Are Reliable


Once you’ve considered refinancing your car loan, there are numerous auto refinance companies with different loan terms. And to tell the auto to refinance companies with reliable services, you first research about 3 to 6 lenders and apply to them all. 


If the lenders have a pre-approval option, and you get pre-approved before submitting a full application, you get a rate quote with a soft credit inquiry that won’t affect your credit card scores, 


And in absence of a pre-approval option, make sure to apply to all these lenders within a short period like about 14 days as by doing this all these inquiries will combine into one when calculating your credit card score.


After pre-approval and receiving the loan offers from these lenders, then consider the following factors:

  • What’s the interest rate being offered by each lender?
  • What is the repayment period of each lender?
  • Is there any hidden fee?
  • What’s the lender’s customer satisfaction rating?
  • Is there any hefty origination fee?
  • Is there any prepayment penalty?


Thoroughly researching your new lenders and considering the previously mentioned factors will not only ensure you get the most reliable auto-refinance with a good interest rate but also help you identify the potential red flags associated with a lender. Some lenders charge huge origination fees when you take an auto-refinance loan and some have prepayment penalties; these two will make auto refinancing more hassle than you bargained for, so look out for them well.


Finally, to select the best auto to refinance companies, look for the one with a lower interest rate, no-prepayment penalties, a shorter term length, and a good customer satisfaction rating.


How Long Should I Wait Before Refinancing My Car?


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How Long Should I Wait Before Refinancing My Car?


There’s no specific time frame you have to wait before refinancing your car; you can even refinance your car right after you purchase it. For instance, your car dealer offers a cash rebate for financing through the manufacturer. After taking the offer, you can refinance for a lower interest rate with a bank or online lender.


However, this might not be the case for poor credit borrowers as they might have to show a track record of consistently paying their loans on time for new lenders to consider them. Also, some banks might have rules about how soon they will consider refinancing a car loan.


All that being said, it’s better to refinance your car loan as early as you can to avoid spending more money if you wait for a long time and cause the number of years to pay off the car to be extended.


How Can I Lower My Car Payment Without Refinancing?


Although refinancing your car loan makes it easier to pay off, it has its downsides, including increased interest and extended loan term. However, there are ways to lower your car payment without refinancing if you’re struggling to make your car payments. The alternatives to auto refinancing include:


  • Loan modification request.
  • Sell it yourself and get a less expensive one.
  • Trade it in to a dealership.


Method 1: Loan Modification Request


Contact the lender, and talk to someone who can help, not the first representative you speak to. Explain your financial struggles; most are willing to modify your loan in terms of lowering the interest rate to make monthly payments more affordable or deferring your payment. 


The earlier you communicate with the lender about your financial issues, the better your chances of getting loan modifications. Most lenders prefer to modify loans because they don’t like going through the car repossession process as it’s costly and time intensive.


Method 2: Sell It Yourself and Get a Less Expensive One 


You can also sell your car privately to earn more and buy a more affordable car. You get more money this way than trading the car to a dealership. You can post your car for sale on Facebook marketplace, craigslist, eBay and others and list it at a price slightly higher than its pay off-price, so when the price decreases during negotiations, it can still cover the cost of the amount you owe.


Method 3: Trade It to A Dealership


This option is best for those that want to lower their car payments and can’t sell their cars personally. Virtually all car dealers accept trade-in in exchange for a new car, but some will buy your car without you needing to buy one from them. 

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Before trading in your car, look up its trade-in value and sell for more or less to cover the amount of money you still owe the lender.


Do You Have To Put Money Down When You Refinance a Car?


Putting money down is required when buying a car to decrease your payments, but it’s not required when refinancing a car. Though some lenders will want you to lower your car loan balance before considering you for refinancing, you don’t need a down payment.


Even though you don’t need a down payment to refinance your car, you need equity. Equity is the difference between your car loan balance and the current worth of your car. This equity shows the lender that the car you’re refinancing has value.


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Refinancing your car loan isn’t an issue; you can refinance as often as possible if you find a lender. Refinancing your car loan is financially beneficial both in the short term as it lowers your payment and in the long term as it lowers your interest.

But always try to assess your situation to ensure you’re getting the best from auto refinancing because although it’s a great option to save money, it also has its downsides. 

Refinancing a car loan isn’t for everyone, it comes with the risk of owning more than your car is worth so make sure you know what you’re entering so as not to deal with more hassle than you bargained for.

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