When is the Best Time to Refinance a Car? - YouTube

so i get a lot of questions from people on the channel asking when the best time

is to refinance a car and also why you should be doing it and

so that's exactly what i'm going to cover in this video

so that you guys can learn something new about when you should be refinancing

your car and why so stay tuned and we'll go

through everything so the first question of when you should

refinance a car is very simple and you can refinance your car tomorrow

if you want to and it really doesn't matter how long you've had the loan for

now you're going to have to pay attention to two things here and they

are just the rate and then your credit score that's all

you really have to be paying attention to

if you want to refinance your car so the first one

your rate this is what you want to pay attention to if you feel like you have

too high of a rate or that you can get a better rate right now

then you do want to be refinancing your car the second thing is your credit

score so if you got a car six months ago and you've made all your

payments on time and you feel that your credit score is a lot higher than it

used to be then definitely consider refinancing

because you can always at least try to do it

and see what happens and also keep in mind that when you're refinancing a car

it is not nearly as complicated as refinancing a house

so this means there's generally no closing costs associated

with refinancing and a lot of the time it doesn't cost anything to do it

so if you can get a better rate meaning an interest rate

or your credit score you feel is a lot higher and you can get a better rate

because of that then definitely consider refinancing

because it's really easy and it's not nearly as complicated as

doing it with your house and then if for some reason you were

told that you can't refinance your car for six months to a year

this is not true unless it's actually stated in your contract

which it probably isn't so for instance if your salesman told you you had to

wait six months before you can refinance don't listen to that unless it's

actually in the contract a lot of the time the salesmen they know

that there's a back-end commission coming

six months or a year from now so they want you to keep that same loan so that

they can get their small commission but they're not telling you that they're

just making you feel like you're contractually obligated

to not be able to refinance and this is not true

unless once again it's actually stated in the contract

so really if you bought a car a week ago you can refinance today if you really

wanted to now what i would recommend is if you are

going to go refinance your car i highly recommend that you check out

your local credit unions and you check their advertised rates on

the internet so you can see what to expect from all

of the different credit unions so for instance the easiest way to do

this is let's say that you live in georgia

just google refinancing a car georgia credit union and you can see what all of

the different credit unions offer for your local area and that's the

easiest way to find the best rates locally for you now if you do end up

refinancing your car just keep in mind that you are going to

have to have what's called a hard credit pull

and this is negatively going to affect your credit score

just for a little bit but keep in mind this is totally normal for getting a

loan because obviously the bank needs to know

if you can pay them back now if you are going to refinance don't

make this the reason why you don't refinance

because your credit score is going to go back up eventually i get a lot of

comments of people saying that they don't want to refinance

because they don't want to have their credit dinged

and this is just something that you need to completely ignore because if you are

going to save money then definitely just have your credit

pulled it's going to eventually go up and i will explain a little bit more

about this at the end of the video now if you guys are liking this video

can you please just give it a big thumbs up

that way i can tell if you're liking this type of content

thank you very much now the next question we have is why should i

refinance my car and this is very simple it just has to

do with two basic concepts which is the fact that you can get a

lower rate you can lower your interest so you're not going to pay as much to

the bank for the loan and then also a lot of the time you're

going to end up with a lower payment generally if you get a lower rate as

well because a lot of the time when you have a car loan you just generally don't

think about the rate that you currently have on it

but right now as i'm making this video car loan interest rates are generally

about two to three percent with optimal credit

so keep that in mind if you have a six percent rate

and your credit's pretty good then you really could probably qualify for about

a 2.5 to a 3 interest rate and save a lot of money on

interest and that's also going to make your

payment go down as well so let's say that you went out and got a car

last month and you financed 20 000 and then you got an interest rate of 6

percent for 60 months now what this means is

that you're going to have a payment of 387 bucks a month

and in total you're going to pay 3 200 in interest

over the entire term of the loan which is a lot of money that you're just

wasting and you're giving the bank just so you

can have that car now but let's say that you really could get

a better rate than what you currently have at six percent

so tomorrow you go into your local credit union you finance the 20 000

you end up with a three percent rate and then you keep the 60 month term

well now your payment's only going to be 360 dollars a month

but now the interest in total that you pay is only going to be about 1500 bucks

so you're going to save a lot in interest this is double in this case

just by refinancing and you're also going to get that lower payment

now obviously if you have a really big car loan like for instance if you're

driving around in a brand new escalade and you finance ninety thousand dollars

then obviously going from a six percent rate to a three

percent rate is going to save a ton of money so just keep that in mind

based on the amount on the loan this is going to make

those numbers change quite a bit and obviously if you have a six percent

rate and you only go down to a five percent rate

but you only finance let's say six thousand dollars that's

really not going to save you that much money but it's still probably worth the

hassle because any money that you save on

interest is just more money that you can use throughout your life

you could pay more towards your car you could just buy some more groceries

anything is better than just giving it away to the bank so keep that in mind

and i just want to be honest here but if you are refinancing your car

just to get a lower payment please make sure that you're getting a better rate

because at the end of the day if you went in and you had a six percent

interest rate and then you extended your loan for

another two years so for instance if you went from a

three-year loan to a five-year loan and you kept the exact same interest

rate or it even went up you are not going to save any money

you are going to have a lower payment which

sounds like you're saving money but you're not the interest rate has to go

down in order for this to actually make sense so what i would recommend you do

is to focus on getting a better rate and then keep the same term that you're

already on so for instance if you have 34 months

left on your car and you go and refinance it make sure

that you're getting a better rate and then because they don't have a

34-month loan go with the 36-month loan because that's close enough

and in this case you are going to have a lower payment and you're going to save

on interest and this is exactly what you want to be doing

and even if the interest rate for a 36-month loan is exactly the same on a

60-month loan just keep in mind that you are going to

be paying more interest on the 60-month loan because remember

you're paying interest on what you owe so if you're spreading that out over

five years versus three you're always going to pay more interest

because that loan has been extended for two years

so just keep that in mind as well cars appreciate way too fast on their own so

you always want to be paying off these loans as soon as you can

don't be doing loans for higher than 60 months because a lot of the time

the car is going to depreciate faster than you can actually pay it off

and you're generally going to end up upside down in the car alone unless you

had a ton down on the car when you originally

bought it so just remember that cars depreciate

way too fast and you want to be paying those off as soon as you can

and then like i said earlier if you feel like you can get a better rate through

your local credit union or that you know that your credit score

has gone up since the last time you checked it

you're probably going to end up getting a better rate and a lower payment

and what's the worst in trying you could go into the bank they could deny you

you can just move on with your life but you can always

keep trying to refinance your car in the future as long as your credit score has

gone up and if interest rates have gone lower

now when you do go into refinance and you have your credit pulled

i have a video over here that explains the entire process so that you guys can

learn more about that if you have an interest also if you just

found this channel i'm jason with honest finance and i make a lot of videos on

different topics that'll give your life and your finances more value so if you

do have an interest in this type of content feel free to

subscribe but thank you for watching and have a great day