How Soon Can You Refinance a Car?

How Soon Can You Refinance a Car?

If you purchased a car a few months back, you may be assessing whether it’s the right time to get your car refinanced and bring down your interest rate. You should opt for car refinance whenever you come across a lender who’s willing to offer you a new loan.  

But it’s easier said than done. Most lenders won’t refinance your car unless it’s six months old. Thus, getting your car refinanced is not easy. It’s ultimately the discretion of your lender, who’ll eventually get your loan approved. 

The primary reason behind the recent rise in the craze of refinancing car loans is the amount of money that a consumer can get back through it. On average, a consumer can get to save between $100 to $300 per year through refinancing a car. 

However, before you reach out to a lender, make sure you have the necessary documents to prove your ownership of the vehicle. Usually, it can take a couple of months for the successful transfer of title from the manufacturer to the consumer.

[Read More: Pros and Cons of Refinancing Car Loan: Everything You Should Know]

Should You Refinance Your Car Loan?

It’s absolutely a brilliant idea to get your car refinanced. However, don’t forget to take quotations and estimated charges from multiple loan lenders before you select a particular lender. 

If the relevant terms and conditions offered by a particular lender suit you, opt for him or her. Without further delay, you should get your car loan refinanced at the earliest. 

Here are the Possible Benefits of Refinancing a Car Loan

  • It can boost your overall credit score.
  • Interest rates for auto loans will be much lower after refinancing.
  • Refinancing your car loan for a longer duration can reduce your EMI or monthly installments.

How Does Refinancing a Car Work?

Refinancing the car loan is a good option to reduce your monthly installment or EMI for the loan taken. 

For the lender, through refinancing a car loan they actually get much more money in the long term.  

Thus, refinancing works well for both parties. It also provides an excellent opportunity for borrowers to enhance their credit scores through car refinancing options.

When to Refinance Your Car Loan?

Ideally, you should wait for a few months before applying for refinancing. During this period, your credit score will actually improve and can play a key role in your future loan-taking abilities. With a good credit score, the amount of your overall monthly installment will get reduced. 

[Read More: How Does A Car Loan Affect My Credit?]

Does Refinancing Hurt Your Credit?

Refinancing might hurt your credit score in the initial phase, but it actually helps. It reduces the amount of your debt and EMI (monthly installment). However, when you go with the refinance option, your credit score will drop significantly. But a few weeks later, it will definitely improve. 

Drawbacks of Refinancing a Car Loan Early?

Refinancing a car loan can lead to the payment of necessary refinance fees. That’s why you should introspect whether refinancing a car loan is worth it or not. Some of the common fees you may have to incur for it are title fees, closing fees, and penalties. 

Refinancing a car loan early means you end up paying much more amount of the loan that you’ve actually taken. At the same time, don’t forget the amount of money you actually need to earmark for repairs and servicing as the vehicle gets older. 

How to Refinance Your Car Loan Early?

You can refinance your car loan soon but it actually depends on the dealer and their relevant terms and conditions. Paperwork and documentation will take some time to process. It’s recommended that you should at least pay your first installment to the lender before applying for refinancing. That’s how you can refinance your car loan as early as possible.

[Read More: 10 Best Online Loan Apps | Instant Personal Loan Apps]

In Conclusion  

Refinancing a new vehicle means you are taking a new loan to clear your old debt. The new loan can be paid over a long period of time, which can help you considerably bring down your monthly installment. Refinancing is easy and prompt. Get in touch with a lender now for more information.  

Arjun Kumar

I’m a writer specializing in finance content. I have 5-plus years of experience in the content marketing world. I’ve worked with various companies in a variety of industries, from news articles to technical articles. I have gained the skills to present helpful content to all precious audiences of the site. My only moto is to build trust, maintain worth and provide interesting content to the people