Overhaulin'

How does one refinance a car loan? After how long can you try to refinance?

Public Comments

1. You need to contact the bank and find out how much they will loan on the car. Chances are you will not be able to refinance everything you currently owe. If you bought it new you got a "new car" loan (low down payment) and now you are getting a "used car" loan(high down payment). The car becomes used day you drive it home. To add insult to injury most auto loans are "upside down" (you owe more than the car is currently worth) because dealers allow a unrealistically low down payment.
2. You typically should not want to refinance unless the new interest rate you can get is 2% below your current one. That being said, it is quite easy. Simply go to capitalone.com and they will take care of you. There is a charge, usually $50-$100 for refinancing. I got out of paying 6.5% interest on my car in 2003 and got a 3.5% when I refinanced. So, my payments were lower and I also SAVED money on interest. I think you can refinance any time you want, but you will be paying more money if you can't get a good break on the interest rate. Happy Holidays
3. Refinancing is only good if you can keep the same term and lower your interest rate. Since a vehicle is a depreciating asset, you will not do yourself any favors by extending the term longer than you anticipate keeping the vehicle. To refinance, go to your bank or credit union (a credit union usually has better rates!) and see if you qualify for a lower rate. Keep in mind that every application you submit will generate an inquiry to your credit bureau report and these will lower your credit score! If you do not know your credit score you can find out what it is at www.annualcreditreport .com. Obtaining a copy of your credit report at this website is free but you must purchase the "credit score" option. Check out the FAQ's to find out more! Good Luck