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What happens if you refinance your car loan?
I have about two years left on my current car loan, but I got a new job and can now afford to make larger monthly payments. I want to refinance my car for a shorter term, but I’ve never done it before. So what happens if I refinance my car loan?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Congratulations on the new job! If you refinance your car loan, you are taking out a new loan with updated terms that replaces the old loan agreement. Refinancing is a great way to find a repayment plan that fits your current financial situation.
When refinancing, ask your current lender about any
prepayment penalties
, and compare offers from multiple lenders to find the most favorable terms. If your lender has a prepayment penalty, refinancing may not be worth the effort.When applying, don’t forget you’ll also need to know:
- Your current monthly payment
- The remaining balance
- The remaining loan term in months
- Your interest rate
To afford larger monthly payments or make repayment more manageable, you can save on other expenses like your
car insurance
. If you want to save money on car insurance, the
Jerry
app is a good place to start. A licensed broker, Jerry does all the hard work of finding cheap quotes from up to 50 top name-brand insurance companies and buying new car insurance. Jerry will even cancel your old policy. And if you ever have any questions, agents are just a text away!MORE: Does refinancing a car hurt your credit score?
View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
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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