When looking to refinance car loans, timing can be important. Is it better to refinance in the early, middle or late stages of the loan? While every situation is different, some general guidelines can help you decide when to refinance.

Early Loan Term Refinancing

Even if you are early in your loan term, refinancing is still an option. However, it is important to know the value of your car compared to what you owe on your current car loan. In many cases, the amount you owe is greater than the car’s value. In this case, you might find it difficult to find refinancing options.

However, if your original loan was taken out with a high interest rate, you might be able to find a much better rate even early in the loan term. One of the fastest ways to know your options is to go with a refinancing network like CARCHEX, which connects with nearly 100 lenders to find the lowest refinance rate possible.

Mid Loan Term Refinancing

If you are in the middle of your loan period, this might be the best time to consider refinancing. This is because the amount you owe on your car loan is likely to be less than the value of your car. This situation is not only attractive to potential lenders, but it also gives you some flexibility. For example, when you refinance, you might decide to keep paying the same monthly payment, but shorten loan term. This strategy can sometimes save you thousands of dollars over the lifetime of your loan.

You can also decide to pay less per month with the same or longer loan term. This option is often used for borrowers who find themselves suddenly short on cash.

Late Loan Term Refinancing

If you are nearly finished paying off your loan, the fees associated with refinancing might cancel out any savings. Finance networks, like CARCHEX, allow you to check into this with no upfront fees. You can know in a very short time if it is advantageous to refinance or not.

One advantage to refinancing late in the loan is that lenders might feel safer refinancing on a loan that is nearly mature since it almost guarantees that the loan will be paid in full.

Car Insurance Issues

Other things to consider are how refinancing might affect your auto insurance premium. In some cases, refinancing at mid or late term allow you to reduce some insurance costs. Check with your auto insurance carrier about the options when you decide to refinance.

Might Depend On The Lender

Some lenders might be more willing than others to refinance at different times – especially very early or late in the loan. Make sure you compare different lenders such as banks, credit unions and online lenders.

If Not Today, Maybe Tomorrow

The biggest factor that goes into car loan refinance savings is the interest rate. Keep an eye on the US Prime Interest Rate, and if it goes down, check to see if refinancing might benefit you. This applies to any loan period – early, mid or late.


If you are wondering about refinancing, the timing can be important. Refinance networks help save time in making the decision. Find the best possible refinance rates through CARCHEX now.

Featured Image Source