How Soon Can I Refinance My Car?

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Automotive Content Editor

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.

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, Automotive Content Editor - May 8, 2024

If you didn't get the deal you were looking for, there's technically no time limit that you have to wait to seek refinancing on your car. However, you're not likely to find a lender willing to take a stab at drawing up a contract as soon as you've driven off the lot. Typically, lenders like to see at least a year or two of good loan management and on-time payments before considering a borrower for refinancing.

Refinancing Timeline Guidance

Refinancing is typically done to save money on your monthly auto loan payment. As a general rule, especially if you're dealing with a low credit situation, it's a good idea to wait at least a year for a chance to qualify for refinancing. However, if you didn't get the interest rate or monthly payment you wanted, but your credit's in decent shape, you might be able to qualify for refinancing after only six months.

Of course, how soon you can refinance depends on both your credit situation and the lender you're working with. If nothing is standing in your way, some refinancing lenders may be able to draw up a new contract for you after only a few days – but this is extremely rare. It's recommended to wait at least 60 to 90 days to try and refinance, this way there's a chance for your paperwork to clear and for the vehicle title to be printed with your name on it.

Refinancing to Save Money

When you refinance your car you're closing out your original auto loan and signing a new contract, often with a new lender. The main reason people refinance is to lower the monthly payment on their auto loan, and you can do this by extending your loan term or qualifying for a lower interest rate.

Combining a lower interest rate and longer loan term will ultimately give you the most savings each month, but if your goal is to save money overall, you need to qualify for a lower interest rate. If you only extend your loan term without getting a lower interest rate, you will pay more overall than you would have without refinancing.

Qualifying to Refinance

Qualifying to refinance right away can be difficult because if a lower rate had been available to you, you'd likely have been offered it during your initial negotiations. To have a good chance at qualifying for refinancing and getting a lower rate, it's a good idea to improve your credit score before applying.

In fact, an improved credit score is typically a standard qualification for refinancing a bad credit car loan. Most refinancing deals are reserved for borrowers with good credit, but if you initially took out a bad credit auto loan, having a better credit score when you apply for refinancing will go a long way.

Besides improved credit, other standard refinancing qualifications include having a car loan amount that fits the lender's parameters, having less than 100,000 miles on your vehicle, and being current on your auto loan.

Refinance or Trade-In?

Sometimes refinancing isn't the solution, other times you or your car may miss some of the qualifications of refinancing lenders, making the process a no-go. If you've been turned down for refinancing, but need to get into a more affordable auto loan, trading in your vehicle may be the solution.

When you trade in you can use any equity in your car as a down payment, or if you have negative equity, you may be able to roll it over into your next auto loan. If you go this route, you may want to act fast in order to try and get a good deal on your trade, as used vehicles are in high demand.

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, Automotive Content Editor

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.

Follow On: LinkedIn

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