Does it make sense to refinance my car to a longer loan term?

While it may cost you more overall, refinancing your current loan to get a longer term can help you reduce your monthly payments to be more manageable in the short term.

When Should I refinance my car?

While technically you could refinance your car as soon as you buy it, it’s best to wait at least six months to a year to give your credit score time to recover after taking out the first car loan, build up a payment history and catch up on any depreciation that occurred when you purchased.

Does refinancing mess up your credit score?

Whenever you refinance a loan, your credit score will decline temporarily, not only because of the hard inquiry on your credit report, but also because you are taking on a new loan and haven’t yet proven your ability to repay it.

Does refinancing hurt or help credit?

Buy now, pay later loans generally do not affect people’s credit. These loans, typically offered at the point of sale, do not yet routinely appear on most credit reports. That means a good payment record on your buy now, pay later accounts won’t help you build credit.

What are the disadvantages of refinancing a car loan?

The downsides to auto loan refinancing can include fees, additional interest if you extend the term or cash out equity, and the risk of owing more than the car is worth.

Is refinancing a car worth it?

Refinancing and extending your loan term can lower your payments and keep more money in your pocket each month — but you may pay more in interest in the long run. On the other hand, refinancing to a lower interest rate at the same or shorter term as you have now will help you pay less overall.