A lender may refuse to refinance a car if your current loan is too new, if your car is too old or has too many accumulated miles, or if your current loan balance is too low or too high. People usually refinance their car loans to save money, as refinancing could earn you a lower interest rate. As a result, it could lower your monthly payments and free up cash for other financial obligations. Credit rating models emphasize credit utilization, which is the amount of money you owe in revolving accounts compared to the total amount of available credit.
If you can afford to reduce your credit card balances, do so and reapply after achieving credit utilization of 30% or less, which is ideal according to VantageScore and Experian. This can help you increase your score and improve your credit utilization score. If you recently purchased a car, you may be wondering when you can refinance your car loan to lower the interest rate or payment. Strictly speaking, you can refinance an auto loan as soon as you find a lender that approves the new one loan.
Refinancing your car loan can help you avoid a sky-high payment or interest rate, but some difficulties in the refinancing process could cause you to pay more than you need.