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When can I refinance a car loan?
I'm hoping to refinance my car loan to get a better deal. When should I do that?
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“Refinancing your car loan can be financially beneficial—but only if you do it at the right time. It’s worth it to refinance when:
- Interest rates have dropped
- You found a better offer
- You’re doing better financially
- You’re having trouble with bills
If interest rates have gone down since you took out your loan, it’s worth
refinancing
. Even if the drop is just a couple of percentage points, the savings will probably be worth it over time.Some loans have better interest rates than others. You can always check around for better loan terms to see if you can find a better deal, especially if your original loan was from a car dealership.
If your financial situation has improved since you took out your loan, you might be paying more than you need to. Lenders will use your debt-to-income ratio and your credit score to determine your loan rate, so an improved financial situation could mean better terms on your loan.
On the flip side, you may want to refinance your loan if you’re having trouble making the payments each month. A loan with a longer repayment period may be a good option to reduce the amount you pay each month.
You could try to renegotiate your current loan to get a longer repayment period, too. Just keep in mind that the longer it takes to repay your loan, the more interest you’ll have to pay.
While you’re refinancing your loan, you may want to revamp your insurance policy, too. The
Jerry
app can help you figure out if you’re paying too much for your car insurance. Jerry pulls policy quotes from over 50 top insurance companies to make sure you’re getting the coverage you need at the right price.”View full answer
- Gregory R.
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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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