Does refinancing start your auto loan over? Part Of Refinancing a Car Loan In this series Refinancing a Car Loan Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with financial calculators and interactive tools, publishing original and objective content. This allows users to conduct research and compare data for free to help you make sound financial decisions. Bankrate has partnerships with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies that pay us. This compensation may impact how and when products are featured on this site, including for instance, the sequence in which they appear in the listing categories and other categories, unless prohibited by law. Our mortgage home equity, mortgage and other products for home loans. This compensation, however, does have no impact on the information we publish, or the reviews you read on this site. We do not include the entire universe of businesses or financial deals that might be open to you. Westend61/Getty Images

3 min read published 20th of October, 2022.

Written by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers to navigate the ins and outs of securely borrowing money to buy a car. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping readers gain the confidence to manage their finances by providing clear, well-researched information that breaks down complicated subjects into digestible pieces. The Bankrate promise

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We are compensated in exchange for placement of sponsored products and, services, or when you click on specific links on our website. Therefore, this compensation may impact how, where and when products are listed in the event that they are not permitted by law. We also offer mortgage or home equity, and other home loan products. Other elements, like our own proprietary website rules and whether or not a product is offered in your region or within your personal credit score may also influence how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about each credit or financial item or product. Swap your current loan by obtaining a new loan. It could result in an interest rate that is lower and a shorter or longer duration than the one you have currently. If you opt for a longer term for repayment on your new loan could cause you to feel as if you're beginning from scratch. Many people refinance their loans for savings. However, refinancing could not be a complete solution if you have more serious financial issues. Refinancing your car can restart the loan When you've decided you want to refinance your loan is the best solution for you financially and the terms that are offered could make your monthly loan payments more affordable. However, it is important to be aware of the loan term you choose to avoid the feeling of "restarting your loan" even if you've been making payments for some time. It is best to make sure you don't add too many payments to pay off the balance by choosing a loan term that is equal or shorter than the current term on your current loan. For instance, if you still have 36 months on your loan then you could refinance to a 36-month loan. This will save you from paying additional interest. With an interest rate that is lower, your payments should also be less. However, refinancing might not be beneficial if you've got less than 24 months remaining in your car loan. The majority of people pay amount of interest in the initial year of the loan and will limit the savings that you could earn if you refinance towards the close of the repayment period. The impact of refinancing on your loan term The most common terms that motorists are faced with when financing a car vary from 24 to 84 months. The lower the monthly installment will be. If you take out a longer loan, you could be stuck paying thousands of dollars higher interest than you would with a shorter loan. While you may be able to get a different interest rate as well, the term change will be the main aspect in determining whether you can effectively "reset" the terms of your loan. The term can be shortened or made longer -- and the right choice depends on your financial situation. To best determine your ideal term length, take advantage of an to find the one that will best ensure that you are able to make monthly payments that you are able to manage. If you're looking for a reason to refinance your car loan There are a few situations in which it's an automobile loan. You're having trouble making monthly payments. Refinancing and changing your current loan's terms could provide you with more time to pay off your vehicle or get a lower interest. But you may be able to get a loan from your current lender without refinancing. You're using your current loan. Better credit will mean better terms. This is especially true when you initially financed your loan through the car dealer. The financing for the current loan with the dealership. If you did the dealership, you may be eligible for better loan terms with an outside lender. Check to see what you can save with lower . If you decide to refinance you must read the purchase contract or contact your current lender to confirm they don't allow you to pay off the loan early. Otherwise, you could incur significant fees that exceed the advantages of refinancing. How do you refinance your vehicle loan If you determine refinancing is right for you and you are ready to make the move. Reflect on the current loan and prepare the documents for the new loan application. Examine your current loan. Find the rate of interest, the payment amount, remaining months and information about any penalties or fees. Check your credit score. Check to see if you have a credit report in condition to qualify for a good rate. Check your credit report for any mistakes while you're at it. Compare lenders. Do not choose the first lender which has a good rate. Check out several lenders of them, including their eligibility requirements, penalties and what are the rates, terms and fees you prequalify for. Refinance your loan. Once you decide to apply with a lender you can apply on the internet and in person. Once you have submitted your application, the lender will inform you whether you're eligible and also how the process will work. The main thing to remember is that you'll be starting all over again with a fresh auto loan by refinancing and could obtain a lower monthly rate or . But before applying, consider the risks that come with refinancing. Find other options to save money, if refinancing isn't the right choice to take based on your budget.

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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the ways and pitfalls of borrowing money to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing concise, well-studied information that breaks down complicated subjects into bite-sized pieces.

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