When is it smart to refinance a car loan?
I’ve been paying my monthly loan payments for seven months. I’m considering refinancing. When is it a good idea to refinance a car loan?
We’re all looking for ways to save on car ownership, and refinancing is a good option!
It is smart to refinance a car loan when:
- You have improved your credit score: You will likely be eligible for lower interest rates on the new loan.
- You don’t owe more than the value of your vehicle: It is likely a lender will reject an application if you have an upside-down loan.
- Your car is not older than 10 years: Many lenders will set a limit on how old a vehicle can be to qualify for refinancing.
- You want to lower your monthly payment: Refinancing can reduce your monthly loan amount and allow you to save more money each month.
- You want to change your loan term: If you need to reduce or lengthen your loan term, refinancing can help match your needs.
It’s usually best to wait at least six months from the date you signed your initial loan to refinance. Since you’ve been paying your loan for seven months, you can look for refinancing if you choose to do so.
If you want help shopping for the best rates on a new loan, try the Jerry app. No matter what your credit score is, Jerry makes refinancing your car easy by comparing quotes from multiple lenders to find a rate that works best for you. On average, car owners pay $85 less every month by refinancing their auto loan.
Hopefully, this clears up when it is smart to refinance!
MORE: How to refinance a car
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