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What does refinancing mean on a car loan?

I was chatting with a friend about my car and they asked what my car loan interest rate was. It's at 12%. They told me I should refinance. What does this mean?

avatar
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Great question! Refinancing a
car loan
 is the process of taking out a new loan to pay off an old one on the same asset, in this case, a car.
The advantages of refinancing are that you can get a lower interest rate, which would specifically pertain to your situation. If your credit score has improved drastically since you got your 12% loan, refinancing is a smart move.
Refinancing also allows you to change the term of your loan, which means you can opt for a lower interest rate or get cash out if you have positive equity.
When you refinance, it’s the perfect time to take a glance at your car insurance to save even more money. One easy way to do this is through the
Jerry
 app—we’ll get you personalized quotes from top providers, so that all you need to do is choose the plan that works best for you!
Best of luck with the loan, and with refinancing!
MORE: How to refinance a car
Auto RefinanceCar OwnershipCar Loan
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