Refinancing Car Loan

by Abram
(Texas )

Question: I have a question about refinancing my car loan. I am currently paying an 18% interest rate on my car loan (I know it's very high), but my question is how long should I wait to refinance? Six months, a year....

Answer: Hi Abram. How long you should wait before refinancing your car loan will depend largely on your credit now and what it will be in the future.

If you were a first time buyer with absolutely no credit when you bought the car, then you will have to wait a minimum of a year. You may be able to find a credit union that will refinance it after 6 months, but that's unlikely.

If you have some credit issues (but not major) and you actively try to clean up your credit and pay well on your current car loan, then you could probably look to refinance in as little as six months.

I would think that would probably be the earliest you could look to do this and again, you'd have to clean up whatever it is that is currently hurting your credit.

If you do nothing and just hope that the car loan itself (well paid of course) is enough to rebuild your credit, then you will more than likely have to wait longer. Something in the range of two years or more.

Of course, if your credit is in really bad shape and you choose to do nothing to fix it, then refinancing your car loan may not be possible.

If you haven't done so already, get your Free Credit Score - See yours at! and see what negative accounts are on there.

If you have small medical collections, cell phone collections, money owed to a court, etc. start paying those off. Start small and work your way up.

It's important as you pay these to try to get the account completely removed and not just shown as paid. Not all collection agencies will do this, but it is well worth it to ask. Take a look at this page that I wrote for more details: Collection Removed.

The faster you are able to clean up your credit, the sooner you can look to refinance.

Don't hesitate to get back in touch with me if you have any further questions about refinancing your car loan and/or your credit.

Take care,

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