Car refinancing: Can you do it more than once?
Quick insights
- It is possible to refinance your car loan more than once, but there are pros and cons to this.
- Refinancing a car loan multiple times might be the right choice for you depending on your financial needs and goals.
- Remember that your credit score can be negatively impacted when refinancing a car loan.
Did you know you can refinance your car loan more than once? Let’s go into detail about the potential implications of car refinancing multiple times below.
Can you refinance a car loan more than once?
Yes, you may be able to refinance a car loan multiple times as long as your lender approves your application. There are no legal limits to the amount of times you can refinance a car, but it can be important to keep in mind the possible financial and credit implications of refinancing your car multiple times.
Why might you refinance a car loan more than once?
There are a few reasons why you might want to refinance your car loan several times. Some of these reasons could include, but are not limited to:
- Improved credit score: If you have a higher credit score than when you first applied for the loan or after your first time refinancing, and if you have made regular, on-time payments, you may be eligible for lower interest rates or improved terms by refinancing again.
- Financial needs: Life happens, and if you need to cover unexpected costs or recently moved to a lower-paying job, you might want to find a way to reduce your car payment to compensate. Refinancing may allow you to do this.
- Lower interest rates: If you’ve noticed a trend of auto loan interest rates dropping, you might be inclined to refinance more than once to try to get approved for a lower interest rate.
Note that refinancing depends on several factors, including limits set by lenders based on the car’s age, mileage and loan-to-value ratio. Additionally, there’s a possibility that your lender may deny you a refinanced loan, for reasons such as having a poor credit score or payment history.
Is it bad to refinance your car multiple times?
Refinancing a car loan isn’t inherently a bad idea—you may need to refinance to meet personal and financial goals. However, some lenders may be wary of allowing a borrower to refinance several times because it could be seen as a sign that the borrower is struggling to make their payments. It can be helpful to weigh some pros and cons of refinancing an auto loan, especially multiple times. Let’s break them down.
Pros and cons of refinancing a car more than once
The pros of refinancing a car more than once can include:
- Potential for lower interest rates and monthly payments.
- Opportunity to adjust the loan term to match financial needs, such as a lower monthly car payment.
- Possibility of removing or adding co-signers based on current needs.
The cons of refinancing a car more than once can include:
- Cumulative costs from fees and potential prepayment penalties.
- Potential for an upside-down car loan, meaning your car could depreciate and be worth less than what you owe on the loan.
- Risk of extending the debt period and increasing total amount of interest paid.
- Potential negative impact on credit score due to multiple hard credit checks.
Weighing these pros and cons may help you determine whether you should refinance your car.
Conclusion
While it’s possible to refinance your car loan multiple times, it can be helpful to understand the potential outcomes of doing so. Each time you refinance, your credit score could be negatively impacted by hard credit checks. However, refinancing may be beneficial for you as it could lower your interest rate or allow you to get terms more suitable to your financial or personal situation. You may want to read the terms and conditions of your loan and weigh the pros and cons before making the decision to refinance your car more than once.
