Does Refinancing Start Your Auto Loan Over?

Auto loan refinancing ends your current vehicle loan and starts a new one, usually with a different lender.
Shannon Bradley
By Shannon Bradley 
Edited by Des Toups

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Refinancing does start your auto loan over. When you refinance a car loan, you choose a new loan that has a different rate and possibly a different term. The new loan replaces your current loan.

Refinance terms offered by lenders most commonly are from two to seven years. Although refinancing starts your loan over, you can choose a new loan term that is shorter, longer or similar to what was remaining on your original loan. Keep in mind that longer loans tend to carry higher rates.

Lenders have different requirements for when you can refinance your auto loan. Some lenders won't refinance a car loan until it has been open for six months or more. Other lenders have no set waiting period after you’ve purchased a car. However, they can’t refinance until your current lender receives the car’s title from the manufacturer or previous owner, and that can take several months.

Some lenders may also require that you have a certain amount of time remaining on your loan in order to refinance. To see a benefit from refinancing, it's best to have at least two years remaining on an auto loan. More interest is paid in the beginning of a loan term, so there is less potential for savings if you refinance too late in the term.

Refinancing a car loan is typically a fast process, with some lenders able to approve and fund the loan on the day you apply.

Considering refinancing your auto loan?

You may benefit from auto loan refinancing in these situations:

  • Your finances have improved and your credit score has increased since taking on a car loan.

  • Interest rates for auto loans have decreased since you first got your loan.

  • You took a higher-rate loan at a dealership and think you could qualify for a better rate with a different lender.

  • You are having trouble making your monthly auto loan payment. Refinancing to a longer term can reduce your payment, but you could end up paying more interest over the life of the loan.

Refinancing is an opportunity to start over with your loan, so take the time to apply with several auto loan refinancing lenders. Once you have all of your offers, you can use our auto loan refinance calculator to compare and find the auto loan that will benefit you the most.

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