Refinancing an auto loan can start your loan from scratch, but it's not necessary. Refinancing can also qualify you for a higher interest rate, which translates to a lower monthly payment. Since refinancing involves applying for a new loan with new conditions, you're basically starting from the beginning. However, you don't have to choose a term based on the term of your original loan or the remaining repayment period.
Usually, the first payment on your new loan will expire 30 days after you've formally accepted the loan. Make sure you know when this payment is due and that you do so on time to avoid commissions or charges. For example, if you're refinancing your mortgage, you might find that the top mortgage refinancing lenders offer several repayment terms, including 10, 15, and 30-year terms. So how much should mortgage rates go down before considering whether it's worth refinancing? The traditional rule of thumb is that you should refinance if your rate is between 1% and 2% below your current rate.
Refinancing is an opportunity to start over with your loan, so take the time to apply with several auto loan refinance lenders.
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