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Are there any disadvantages of refinancing a car loan?
I have an 8% interest rate on my car, but I think I'm paying too much after looking at current rates. I'm thinking about refinancing my car, but I don't know if there are any drawbacks. What are the disadvantages of refinancing a car loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
In most cases, refinancing a
car loan
can save you money, but it’s not always the right move. In certain scenarios, refinancing can actually hurt you financially. These disadvantages include:- Paying refinancing fees from your old or new lender
- Paying more interest, especially if you refinance your car loan for a longer term
Conversely, refinancing your car is beneficial if you can:
- Get a lower interest rate
- Lower your monthly payment without substantially extending your loan
- Borrow extra money to pay down high-interest debt (known as a cash-out loan)
If you can’t find a better refinancing rate, you can still save money in other ways—like on your car insurance policy. Download the
Jerry
app today to compare rates from dozens of car insurance companies to make sure you get the best rate possible for your car insurance policy.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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