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Why do you refinance a car loan?

I recently moved into a new neighborhood and I’ve seen multiple bank storefronts advertise that they refinance car loans. I’ve never refinanced and I’m not sure what the point is. Why do people refinance car loans?

Jack Walsh · Updated on Nov 30, 2021

Reviewed by Shannon Martin, Licensed Insurance Agent.

Congratulations on the recent move! People typically

a

to get a new loan agreement with an updated interest rate and terms, and many reasons exist why someone may want a new loan agreement.

When you refinance a car loan, you apply for a new loan that buys out the old one. Some people choose to refinance if:

Their credit score has improved, and they are eligible for a lower interest rate.

Their monthly payments are too high, and they are struggling to repay the loan.

They want to increase their monthly payment and pay off the loan sooner.

They disagree with their current lender and how they conduct business.

If you’re interested in refinancing, shop around and compare offers from a few lenders to find the most favorable agreement, including:

National and local banks

Credit unions

Online lenders

Because you recently moved, your

is likely to readjust your rate. If you want to compare quotes and ensure you aren’t overpaying, give

a try.

Jerry is an insurance comparison app that shops for low prices with over 50 different insurance companies for free. You can get quotes in seconds, can make changes at any time, and if you ever have any questions, agents are just a text away!

MORE:

Does my car insurance cover me if I move to a new city?

View full answer

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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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