What does it mean to cash-out refinance a car loan?
I've heard of regular refinancing, but cash-out refinancing is new to me. What is this?
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Answered on Apr 07, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.
“If your car is worth more than you owe on it, a cash-out refinance loan will allow you to refinance the car for up to 100% of the vehicle’s value. This will allow you to pay off your original loan and pocket whatever is left over.
For example, we could say your car is worth $11,000, but your auto loan has a remaining balance of $4,000. You could refinance your loan for up to $11,000 and pocket the $7,000 difference in cash.
This could be a smart move that can save you money in interest, lower your monthly payments, and free up some much-needed cash, but it could also mean that you end up paying more for your car than it is worth. “
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