Can a borrower refinance their car loan?

I purchased a car a few years ago, but my credit score has grown by leaps and bounds. Now it’s about 700, even though it was about 500 when I purchased the car. My current interest rate is 11%, but I’m sure I can find a better rate. Can you refinance a car loan if your credit score goes up?

Answer
Excellent work on improving your credit score over time! With that said, you can certainly refinance your car loan, especially since your credit score has increased and you’ve been making on-time payments.
The first step in refinancing your car loan is to look at your credit report. Pay off any high-interest debt, derogatory accounts, or delinquencies if at all possible.
Next, consider if a refinancing is actually the best plan for your finances and current situation. Ask yourself these questions before you start applying for car refinancing:
  • Are you going to extend the loan or aim for a quicker payoff?
  • Does your car have less than 100,000 miles or is less than 10-years-old?
  • Does your current lender have prepayment penalties?
  • Can you find a better interest rate?
Assuming your lender has no prepayment penalties, your car is new enough, and you can find a better interest rate, refinancing is probably a smart move.
However, you shouldn’t be resigned to accept savings on your car loan alone. Instead, shop car insurance rates with the Jerry app. Since the lender will still require full coverage car insurance, shopping around is in your best interest.
As a licensed broker, Jerry helps you find and compare quotes from over 50 top providers in minutes. When you find a better rate, Jerry can help you buy your new coverage and even cancel your old policy!
Eric Schad
Answered on Dec 18, 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.
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