The term refinance is typically used in reference a car loan or home mortgage. It means getting a new loan to pay off an existing loan, at a lower monthly payment.

Those who are interested in refinancing a car loan are looking for a way to reduce payment amount to better fit their budgets. Unfortunately, refinancing an auto loan doesn’t usually have the same large effect as refinancing a home loan.

Refinancing only makes sense if the borrower’s credit score has changed significantly, or if the borrower is willing to spread out the loan to additional months.

In reality, credit scores don’t improve very fast, often over years, not months. Therefore it would usually be unreasonable to assume that credit scores would change during the first couple of years of an auto loan. Get a Dark Web Scan and your Experian Credit Report for FREE!

It may also be unrealistic to try for a longer loan term. Banks and finance companies don’t like providing long loans for older cars. So, unless the car in question is relatively new, asking for a loan extension (actually a new loan) may not work.