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Will refinancing my car start my loan over?
Does refinancing your car loan cause the loan to start over? I have a car loan that I've paid on for 27 months, but the interest rate is 18%. I built my credit score to 753 during that time and my friend told me I should refinance the loan. However, I have reservations because I don't want to start from scratch.
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Refinancing doesn’t necessarily mean that you’re starting your car loan over.
For example: You say you’ve been making payments for 27 months. Let’s say you started with a 60-month loan, so you’d still have 33 months to pay.
- When you refinance the loan: You don’t have to start back at 60 months unless you want to. Most lenders will require a refinancing in 6- or 12-month increments.
So in your case, you’d probably refinance for a 36-month loan. However, you’re more than welcome to take out a 24-month loan or another 60-month loan. The choice is yours.
Don’t think of it as starting over. In many cases, you’ll save tons of money over the life of the loan and can choose a
loan term
that fits your needs, goals, and financial situation.View full answer
- Gregory R.
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