How Soon Can I Refinance After Buying a Car?

Author Image

Is there such thing as refinancing a car loan too early?

Unless you pay for your new car in cash, you’ll likely take out a car loan. When you do so, know that you don’t have to commit to your initial loan forever. There may come a point where you want to refinance your auto loan to accommodate your new needs or priorities. But how soon can you move forward with a refinance after you buy a car?

2023 Auto Refinance Rates See Today's Rates

What Is Auto Loan Refinancing?

When you refinance your auto loan, you replace your existing loan with a new loan. This strategy can help you save money on your monthly payments via a lower interest rate or longer term. Auto loan refinancing may also allow you to pay off your car loan faster so you can finally own your vehicle free and clear.

When Does It Make Sense to Refinance Your Car Loan Early?

In some instances, it’s in your best interest to refinance your car loan early. Here are some situations in which it makes sense.

Interest rates have dropped

Car loan rates fluctuate on a regular basis due to the prime rate and other factors. If you purchased your vehicle a while ago, auto loan rates may have gone down since then. A lower rate can save you thousands of dollars over the life of your loan.

Your credit score has improved

The higher your credit score, the more likely you are to land a low interest rate and favorable loan terms. If you’ve improved your credit score since you received your current loan, you may be eligible for a better rate.  Be sure to check your credit report for any errors and dispute incorrect information.

You need lower monthly payments

If you’d like to increase your monthly cash flow or simply can’t afford your current car payments, refinancing your car loan can help you secure a lower car payment. Keep in mind that if you extend your car loan term, your car will likely cost you more in the long run.

You want a new lender

Some banks, credit unions, and other lenders reward loyal customers with low rates. They may also offer special deals to attract new customers, especially those unhappy with the car loan they got at their local dealership. If you’ve developed a relationship with one of these lenders and qualify for a competitive rate, auto refinancing may be the way to go.

Auto Refinance Calculator Calculate Your Savings

When Are the Advantages and Disadvantages of Refinancing Early?

Just like most financial decisions, refinancing your car loan comes with a few advantages and disadvantages which we’ll discuss further below.


  • You may save money: An early car loan refinance can save you a lot of money on interest, as long as you receive a lower rate. The earlier you refinance, the more you’ll be able to save over the life of your loan.
  • You may free up cash flow: If you’re paying down credit card debt or your financial situation has changed, refinancing to lower monthly payments can free up cash flow and make it easier for you to cover your bills.
  • You can pay off your car loan faster: You can take advantage of the lower interest rate and apply your savings toward your principal balance. These extra loan payments will save you even more money over the life of the loan.
Early Payoff Auto Loan Calculator





Increasing your monthly payment by $0 will save you $0 in interest and you will pay off your loan 0 months sooner!


  • You may not be eligible for refinancing: If you apply to refinance your auto loan, there’s no guarantee you’ll get approved. For example, you may not qualify if you’re upside down on your loan, meaning you owe more on your current loan than your car’s value.
  • You may be on the hook for a penalty: Depending on your current auto loan lender, you may be responsible for a prepayment penalty. Though rare, a prepayment penalty is a fee you pay for paying off your loan early.
  • You may not qualify for a good rate: If your credit score has stayed the same or gone down since you applied for your initial loan, you may have trouble locking in a better rate that makes refinancing worth it.

How Soon Can You Actually Refinance a Car Loan?

If you’re interested in refinancing your car loan, you may start looking for new lenders so as soon as you’d like.

Believe it or not, you may be able to refinance right after you buy your car. If you are, just make sure it’s in your best interest to do so. You don’t want to go through the refinancing process and later find out that it actually costs you money or takes a toll on your long-term financial plan.

Compare Auto Refinance Rates
No impact to credit score.
Shop For Rates Now

How Do I Know If It Makes Sense to Refinance My Car Loan?

To determine whether it makes sense to refinance your car loan, take the following steps.

  • Consider your current loan: Take a close look at your existing loan and find out how much you still owe on it. If you owe more than the value of your car, refinancing is probably not a good choice.
  • Figure out if you qualify: Do your research and shop around for refinancing offers from various lenders. Pay attention to their requirements to make sure you’re eligible.
  • Determine your savings: Use an auto refinance calculator to figure out how much you can potentially save. Plug in your original loan amount, remaining balance, current interest rate, and initial loan term. Then, enter your anticipated new interest rate and term for your new loan.

If you owe less on your car than it’s current value, meet the requirements of various lenders, and believe you can save money by refinancing, this option may be well worth it.

Car (LTV) Loan-to-Value Calculator

How much is your current car loan balance?
What's your car's current value?

How Often Can I Refinance My Car Loan?

There is no set amount of times you can legally refinance your car. However, each lender may have its own rules. For example, you may not be able to refinance multiple times with the same lender or broker.

If a lender notices that you’ve refinanced multiple times, they may even disqualify you from a loan. After all, they’re in business to make money and taking on a borrower who has a track record of refinancing often may not benefit them.

Refinancing Soon May Be a Good Idea

While auto refinancing isn’t right for everyone, it is a smart financial move for many. It can allow you to save money on interest, lower your monthly payments, or pay off your car sooner than you ever thought possible. If you decide to refinance soon, be sure to compare lenders, rates, and terms so you can score the best loan for your unique needs.

Ready to refinance your car loan? Find a Better Loan Now

About The Author

Anna Baluch

Anna has written for Credit Karma, LendingTree, Experian, Freedom Debt Relief, among many other publications. She is passionate about helping people from all walks of life make good financial decisions. Anna lives in a suburb of sunny Cleveland, OH and enjoys working out, trying new restaurants, and volunteering.

Read More

by Jamela Adam

How To Refinance a Car Loan

If you’re one of many Americans wanting to refinance your car, we’ll walk you through the steps. Refinancing your car includes several steps: shopping around, gathering the necessary documents, pre-qualifying, submitting an application, and finalizing the loan. If you're one of the many people struggling to keep up with…

by RateGenius

Buying a Car from a Private Seller: A Helpful Guide

If you're in the market for a used car, you may consider purchasing from a private seller instead of a dealership. This is a great way to find a vehicle that meets your needs and fits your budget. However, there are some important considerations to keep in mind when buying from an individual. First off,…

by RateGenius

Should I Buy a Car with a Salvage Title?

A salvage title is given to a car damaged in an accident, fire, flood or declared a total loss by an insurance company. Many assume that a salvage title means the car is not worth buying, but this is not always the case. With some research and due diligence, it is possible to find a…

Customer Reviews

Read our Certified Reviews


Apply Now

Lower your interest rate and drop monthly payments by an average of $101*/month!