How Long Before I Can Refinance My Car Loan?

by Sheila
(Houston, TX)

Question: How long before I can refinance my car loan? I am not happy with the interest rate or local bank the dealership used to finance my new car.

My credit rating is 'fair', but I feel my rate is way too high. Prior I had refinanced my trade-in with a credit union that gave me a great interest rate and lowered my payment considerably.

I asked the dealership to use this credit union, they stated that this credit union was in their network, but didn't use them.

How long do I have wait before I can refinance my new car with the credit union that gave me such a great interest rate?


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Answer: Hi Sheila,

I wonder why they didn't use the credit union you already have a history with. If you have not had much change with your overall credit rating, then my only guess would be that the dealership made more money financing your car loan with this other bank. There are big profits in marking up customers finance rates!

As for how long before you can refinance your car loan, you'd want to be sure to review the contract you signed to see if there are any prepayment penalties.

More than likely there are not and you should be able to refinance at any time. Many dealers will tell you to wait 6 months and this is sometimes true if someone is trying to build credit, but is not the case if your credit is already OK.

The only reason (outside of someone trying to build/rebuild credit) they would say this is because this is the chargeback period to the dealer if someone makes an early payoff or refinances.

If your contract doesn't specifically say something about early payoffs or penalties, then you should be good to go as soon as you like.

If I can make one recommendation it would be to also check out Money Aisle as well as your own credit union.

It's actually kind of fun, because you get to run a reverse auction and see rates from multiple lenders (if they have lenders in your area). They work with lots of different credit unions and lenders that may be able to give you an even better rate.

Hope this helps,

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