What if Auto Loan Refinancing Is Too Expensive (Right Now)

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by RateGenius

With rising living expenses, finding ways to refinance and cut back is as necessary as ever.

In this article, we discuss improving your financial situation to set yourself up for success when the time comes to refinance your auto loan.

We’ll explore ways to improve credit scores to secure better loan terms, increase income to make refinancing more attainable and embrace minimalism to cut unnecessary spending. Additionally, we’ll uncover the importance of budgeting, patience, and perseverance in your financial endeavors.

Let’s look at six things to do if auto loan refinancing is too expensive for you right now.

What if auto refinancing seems too expensive right now?

People often think refinancing a car loan costs too much. However, this is a myth because refinancing isn’t inherently expensive. It’s meant to be a cost saving measure.

Focusing only on the upfront fees misses the long-term financial benefits. Consider the loan’s total price alongside your monthly expenses. Refinancing acts as an investment, leading to lower monthly payments and interest rates. These savings accumulate, making other expenses more manageable.

Many who refinance save more over time. A small upfront fee now can lead to big savings later, a better option than sticking with a bad loan.

It’s unrealistic to expect living costs to drop soon. Delaying refinancing could cost you more in the long run.

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1. Improve your credit to lift your chances

Improving your credit score plays a pivotal role in making refinancing as effective as possible in reducing the costs of car ownership. When you refinance, lenders use your credit score to assess the level of risk they are taking by lending to you.

Lower risk translates to lower interest rates, a game-changer for your budget. Getting low rates is nearly impossible with bad credit. However, there are many ways to improve your credit score. By paying off any collections accounts, reducing your highest balances on credit cards, and requesting credit limit increases, you will see your number make its ascent.

Requesting a higher limit can improve your credit utilization ratio, which is the amount of credit you’re using compared to your limit. A better ratio can boost your credit score. As your score rises, you’ll find it easier to get loan approvals, secure lower interest rates, and save more money.

This will translate to more approvals, lower rates, and the most opportunity to save.

Good credit is important for getting loan approvals. A strong credit history opens doors to better loan terms and ultimately makes refinancing a more affordable and advantageous option for you.

2. Boost your income to make refinancing more feasible

Increasing your income is a practical strategy if you’re looking to make refinancing a more feasible option.

Extra earnings help you meet eligibility criteria for the refinancing process. It also makes it easier to afford related costs, like closing fees, appraisal fees, and upfront payments. More income ultimately improves your chances of getting a more favorable offer.

Consider pursuing career advancement opportunities within your current job or industry. Talk to your boss about taking on additional responsibilities or seeking promotion opportunities.

If you are not in a position to switch careers, explore side gigs, freelance work, or weekend work. A side hustle brings in $1,122 a month, on average. Popular platforms like Uber, Lyft, Upwork, and Rover allow you to earn extra income conveniently. Using these platforms will enable you to be your boss, meaning you don’t have to juggle family schedules, your full-time position, and a side hustle.

“Embracing minimalism is not just about saving money in the short term; it’s a long-term lifestyle change that will lead to financial freedom and a greater sense of contentment with less.”

3. Save and build a refinancing fund

Building a savings fund for refinancing helps you cover essential costs like closing fees and upfront payments. With enough saved, you can also make a down payment for more favorable loan terms.

Start by setting a clear savings goal. Craft this goal by calculating the amount needed to cover refinancing costs like closing fees and upfront payments. The proverbial advice is to save at least 10 percent of your income, although more is beneficial.

To manage your savings effectively, open a dedicated account for your refinancing fund. Look for an account that features no monthly fees and direct deposit options. To maintain consistent contributions, automate your savings by setting up regular transfers to this account, ideally right after receiving your paycheck. This method ensures that you steadily accumulate the funds needed for refinancing.

By diligently saving for refinancing, you cover immediate costs and set the stage for long-term financial stability. The benefits of building this fund go beyond just securing better loan terms. It provides a financial safety net, enhances financial discipline, and opens doors to other investment opportunities.

4. Practice minimalism to raise money and cut needless spending

Embracing minimalism is not just about saving money in the short term; it’s a long-term lifestyle change that will lead to financial freedom and a greater sense of contentment with less.

One effective way to achieve this is by cutting down on subscriptions that drain your finances. Pay special attention to your streaming services, music, online news, food delivery, and cloud service subscriptions. These add up quickly if you’re not careful!

Another way to save is by cooking at home. Preparing meals instead of ordering take-out reduces your food expenses and tipping. It gives you better control over your nutrition, money, and portion sizes.

Additionally, consider selling excess items you no longer use, such as electronics, clothes, RVs, sports and gym equipment, and furniture. Platforms like online marketplaces, eBay, and Amazon offer opportunities to turn these items into cash, no matter your housing situation.

Practicing minimalism also involves distinguishing between wants and needs when making purchasing decisions. Before buying something, ask yourself if it can wait or is needed now. You will allocate more funds towards your financial goals by curbing impulse purchases and focusing on what you genuinely need.

“If you encounter obstacles or can’t get approved for a loan right away, remember that it’s not a definitive no; just no for right now. Be patient and stay committed to your financial objectives; soon enough, the yes will come.”

5. Start a budget, practice patience, and don’t give up

With any financial goals, starting by creating a budget is essential. A budget provides a straightforward roadmap to navigating your finances and reaching your monetary destination.

Patience is a vital step to remember in achieving goals. If you encounter obstacles or can’t get approved for a loan right away, remember that it’s not a definitive no; just no for right now. Be patient and stay committed to your financial objectives; soon enough, the yes will come.

One practical approach is to plan your purchases using a thoughtful budget and a spending calendar. These tools help you keep track of your income and expenses, ensuring that you’re spending wisely and showing where you can allocate additional funds toward your goals.

Use waiting time to your advantage. It will take time to improve your credit, increase your income, or reduce your debt-to-income ratio. The most important thing you should do is stay consistent. Every advancement will enhance your financial profile and increase your chances of achieving your goals in the future.

6. Maximize the affordability of your monthly payment

Making your monthly payment as affordable as possible will loosen your financial restrictions. One option is extending the loan term, which will result in lower monthly payments. Some lenders offer prolonged loans, such as 84 or even 96 months. Extended periods are prevalent for lower auto loan payments.

While this will reduce your monthly financial burden, it’s essential to be aware that longer terms may mean paying more in interest over the life of the loan, so weigh the costs and benefits of each route.

Another practical approach is to make a substantial down payment upfront. By putting down a more considerable sum at the beginning of the loan, you’re financing less, resulting in more affordable monthly installments.

To get the best possible rate and terms, shop around for loans. Loan marketplaces like RateGenius are beneficial in this regard. They allow you to compare offers from multiple lenders, helping you find the most competitive interest rates and terms that align with your budget and financial goals.


This article has highlighted essential strategies for achieving your refinancing goals. Improving your credit, boosting income, building savings, and practicing minimalism are vital steps to securing a more stable financial future. Budgeting, patience, and perseverance are also crucial in your financial journey.

By implementing these methods, you will take control of your finances and confidently work towards your goals.

Kickstart your plan by learning what you can afford to refinance with an auto loan calculator today!

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About The Author


A better way to refinance your auto loan. RateGenius works with 150+ lenders nationwide to help you save money on your car payments. Since 1999, we've helped customers find the most competitive interest rate to refinance their loans on cars, trucks, and SUVs. www.rategenius.com

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