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Is it a good idea to refinance my car loan?

I’ve been happy with my car loan and haven’t struggled to make the monthly payments, but my credit has significantly improved since I took out the loan. Is refinancing my car loan a good idea?

avatar
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I’m relieved to hear you’ve been happy with your
car loan
and haven’t struggled to make payments! Because your credit has significantly increased, it is a good idea to refinance your car loan because you may be eligible for a better interest rate.
Before you shop around and compare offers from a few lenders to find the best interest rate, ask your current lender if they can offer a better rate or have any
prepayment penalties
. If you are liable for a prepayment penalty, the charges may offset any benefit of refinancing.
If you owe more than your vehicle is worth, you are in an
upside-down car loan
, also known as having negative equity. If you have negative equity, lenders will refuse your application because if you default, your car isn’t going to cover the remaining balance of the loan.
Because you’re taking the time to review your car ownership documents, you should also look over your
car insurance
to make sure you have the right
types of coverage
.
If you want to save money on car insurance, the
Jerry
app is a good place to start. 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!
MORE: Does refinancing a car hurt your credit score?
View full answer 
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.

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