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What does it mean to cash-out refinance a car loan?
I've heard of regular refinancing, but cash-out refinancing is new to me. What is this?
Johnny Puckett · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“If your car is worth more than you owe on it, a cash-out refinance loan will allow you to refinance the car for up to 100% of the vehicle’s value. This will allow you to pay off your original loan and pocket whatever is left over.
For example, we could say your car is worth $11,000, but your auto loan has a remaining balance of $4,000. You could refinance your loan for up to $11,000 and pocket the $7,000 difference in cash.
This could be a smart move that can save you money in
interest
, lower your monthly payments, and free up some much-needed cash, but it could also mean that you end up paying more for your car than it is worth.
“View full answer
- Gregory R.
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