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When can I refinance my car loan?
I’ve paid my monthly car loan for one year now, but I have a high interest rate. I want to lower it, but I’m not sure if refinancing is possible. When is the suggested time to refinance my car loan?
Phoebe Mah · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
No restrictions or legal precedents exist as to when you can
refinance your car loan
. But how early or late you decide to refinance can impact your chances of getting approved for a loan or seeing the benefits of refinancing. Most personal finance experts agree that the recommended time to refinance is to wait between six months to one year after the original signing of the loan.However, the ability to refinance hinges on whether you have positive or negative equity. If you owe more on your loan than the car is worth, you have negative equity. When you have negative equity, lenders typically won’t refinance your vehicle.
If you have positive equity or owe less than the car is worth, refinancing is easy and you should find no problems getting approved, provided you have decent credit and stable income.
Most buyers get 72-month loans, and these borrowers reach the break-even point around 48 to 52 months. So before you go through the hassle of shopping quotes, make sure you are at or near your break-even point.
On average, car owners pay $85 less every month by refinancing their auto loan. Plus, you can save even more money shopping insurance with
Jerry
.As a licensed broker,
Jerry
helps you find and compare quotes from over 50 top providers in minutes. When you find a better rate, Jerry can help you buy your new coverage and even cancel your old 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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