More interest overall A longer loan term means interest has more time to accrue, so even if you get a lower annual percentage rate, adding an additional 12 months could end up offsetting long-term benefits. Therefore, it's usually best to avoid refinancing a longer-term car loan, unless necessary. Refinancing your auto loan can affect your credit score both positively and negatively, depending on your financial situation. Credit inquiries are likely to lower your credit score, for example, but your ability to pay for your car on time thanks to refinancing can improve it.
Because of this, if you're planning to apply for a mortgage or other major loan soon, it might be worth putting off refinancing your car. Because refinancing usually makes it easier to repay the loan more quickly by reducing monthly payments, credit utilization may decrease later of refinancing.