Are there any disadvantages of refinancing a car loan?

I have an 8% interest rate on my car, but I think I'm paying too much after looking at current rates. I'm thinking about refinancing my car, but I don't know if there are any drawbacks. What are the disadvantages of refinancing a car loan?

Answer
In most cases, refinancing a car loan can save you money, but it’s not always the right move. In certain scenarios, refinancing can actually hurt you financially. These disadvantages include:
  • Paying refinancing fees from your old or new lender
  • Paying more interest, especially if you refinance your car loan for a longer term
Conversely, refinancing your car is beneficial if you can:
  • Get a lower interest rate
  • Lower your monthly payment without substantially extending your loan
  • Borrow extra money to pay down high-interest debt (known as a cash-out loan)
If you can’t find a better refinancing rate, you can still save money in other ways—like on your car insurance policy. Download the Jerry app today to compare rates from dozens of car insurance companies to make sure you get the best rate possible for your car insurance policy.
Eric Schad
Answered on Nov 08, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
thumb-up

Did this answer help you?

Ask us a question by email and we will respond within a few days.
thumb-up

Have a different question?

You can meet us at our office and discuss the details of your question.
Let Jerry’s experts help you find savings on your car insurance!
No long forms or spam · Get quotes from 40+ carriers
Find insurance savings (100% Free)
rating primary
4.7/5 Rating on App Store

Easiest way to compare and buy car insurance

√
No long forms
√
No spam or unwanted phone calls
√
Quotes from top insurance companies
Find insurance savings — it's 100% free