If you're wondering how much it costs to refinance a car, it's actually very straightforward because it's nothing like refinancing a house 2022.
when you're refinancing a house you've got tons of different associated fees along with the new mortgage.
but when refinancing a car you typically don't have any fees.
HOW MUCH DOES IT COST TO REFINANCE A CAR
so we're talking you don't have an origination fee most of the time and most auto loans don't come with a prepayment penalty meaning you actually have to pay a fee if you pay off the loan early.
so most loans are very straightforward and they don't cost you anything to refinance and in the rare case that you do.
end up refinancing your car if you see any fees associated with it then i would try to have those removed otherwise maybe just go with another lender because like i said most of the time they are not going to be charging origination fees or prepayment penalties.
so maybe if you see like a 10 fee for paperwork that's not the end of the world but usually it shouldn't cost you a thing.
now technically even if the loan doesn't cost you anything up front that doesn't mean that it's free.
because there's always going to be an interest rate associated with the money that you're borrowing and obviously the higher the rate the more money you're going to pay in interest over the life of the loan.
so let's pretend that you go in today and you want to refinance your car and you end up with a 20 000 loan and then you get a really good rate because you've got good credit.
let's say that that's three percent and then you want to finance the loan over 60 months which is five years.
now what's going to happen is you're going to end up with a payment of about 360 bucks a month and then in total over the life of the loan you're going to pay about fifteen hundred and sixty dollars in interest and technically that's what you're paying as a cost to refinance your car.
because the bank is going to make potentially 1560 bucks off of you as a customer over five years just for lending you that money.
then keep in mind if you don't pay the exact amount that you owe each month or you end up with any late payments then you can also have other fees that are associated with your bank.
so obviously in that case they can make even more money off of you if you're not following the contract exactly as it's stated.
if you are going to refinance your car i would highly recommend that you only do it if you're going to end up with a better rate than what you currently have so for instance if your current rate is 13 and your credit has improved quite a bit and you can get a three percent rate then you are going to save a lot of money and interest and you should probably refinance.
also when you're refinancing try to keep the term length about the same as what you currently have.
so for instance even if you started your car at 60 months well if you only have 35 months left then when you refinance you should probably do a 36 month loan which is the three year that way you're close to what you were already at.
because if you make the loan too much longer then you're going to end up upside down in your car most likely which means that you owe more than the car is actually worth and you don't want to be in that position.
so try to keep the term length close to what you already have left on the loan.
so if your goal for refinancing is just to get a lower monthly payment then that's probably going to happen when you refinance.
because even if you've got a higher rate all the bank has to do is just make the length of the loan longer and then you're most likely going to have a lower monthly payment.
but that doesn't mean that you're actually saving money because like i said i only recommend that you do this if you're going to get a lower rate than what you currently have and then try to keep the length of the loan close to what you already have left on your current loan.
now if you're wondering who to go with if you want to refinance i always recommend just checking out your local credit unions because they typically have extremely competitive rates.
So this is all about "How Much Does it Cost to Refinance a Car?" that we think you might helpful.