Yes, you can refinance a car loan more than once. However, multiple refinances are not always beneficial—it depends on your loan and financial situation.
You may want to refinance again if:
You now qualify for a better rate
You need breathing room in your budget
You need to make a change to your loan, like adding or removing a co-borrower
Refinancing a second time may be less advantageous if:
You have significant pre-payment penalties in your contract
You have less than a year left of your loan
Your loan is underwater
You don’t qualify for a better rate
Read on for a more in depth look at multiple refinances, how they work, and the factors involved in deciding whether a repeat auto loan refinance is right for you.
Refinancing a car loan again after you’ve already refinanced can be a great choice under the right circumstances.
In this guide, you’ll find information on:
The refinance process for an additional refinance
Reasons to refinance multiple times
When not to refinance again
How a repeat refinance will affect your credit
It is possible to refinance your vehicle more than once. Here’s a quick overview of the essentials of multiple refinances.
In this section, you’ll find answers to the following key questions:
Can you refinance a car loan more than once?
How does refinancing a second time work?
Can refinancing a second time save you money?
Yes. Many people refinance more than once for various reasons. There is no policy limiting how many times you can refinance.
Refinancing a loan that’s already been refinanced works just the same as refinancing the first time around. You’ll:
Get quotes and check eligibility
Find your best deal
Sign with your selected new lender
Have the lender pay off the old loan
Stop making payments on the old loan and start making payments on the new loan to the new lender according to your new loan terms
Refinancing a second time can save you money, especially if your financial situation has significantly improved or interest rates have dropped.
However, refinancing more than once is not guaranteed to save you money, and saving money is not the only reason drivers choose to refinance more than once. Some people choose to refinance a second time to lower their monthly payments or change other terms on their loan, even if it means paying a little more over the life of the loan.
Just like with your first refinance, you should check the fine print of your old loan to make sure you know about any prepayment penalties or other charges you might incur when paying off the loan early. These fees can add up across multiple refinances, but for many drivers, the fees are worth it for the benefits of refinancing.
Want to know if you could save with a refinance? Check your eligibility and discover how much less you could be paying monthly with a free, no-commitment quote from Auto Approve.
Get your free quote to see how much you could save.
Refinancing more than once can be beneficial if:
Your credit has gone up
Your income has gone up or your debt-to-income ratio has improved
Market rates have dropped
Your budget is overstretched and you need a lower monthly payment
You want to add or remove a co-borrower
Essentially, there are two key reasons to refinance more than once: the first is to save money, and the second is because something about your current loan is no longer working for you.
If your credit has gone up or your financial picture has otherwise improved, or rates have dropped significantly since you got your initial financing, you may well be eligible for a better rate that will save you money monthly and over the life of the loan. In that case, it’s almost always a good idea to refinance again.
The other reasons to refinance more than once include adding a co-borrower (for example, if you want to help a family member build credit), removing a co-borrower (if there’s a second person on the loan and the arrangement is no longer working), and lowering your monthly payment, even if it means paying a little more over time.
With costs rising and a tough economy right now, this is a common reason to look for a repeat refinance. If the choice is between not making or struggling to make payments and paying a little more interest over time to give yourself some breathing room and make it more possible to make full, on-time payments, it’s a very good idea to refinance to a lower payment. In the end, it’s better to have your car than risk losing it.
Refinancing more than once may be a bad idea if:
You got a great deal and are locked into a low interest rate
Your credit or financial picture is worse than it was when you got your initial financing
Your loan is underwater
Reputable lenders tell you you’re not eligible
Your loan has less than a year left
Your loan has significant pre-payment penalties
You need your credit in tip-top shape for another major purpose
In short, you may not want to refinance if it’ll cause your payments to go up, if you can’t get a loan from a trusted lender, if the refinance will cost you more in fees than you’ll save in monthly payments, or if you can’t take the temporary hit to your credit associated with credit checks and new lines of credit.
While lenders will allow many repeat refinances, the benefits of refinancing are often reduced the more you do it.
Each time you refinance, just like with getting new financing, your credit takes a minor hit.
Your credit score is determined based on several factors:
Payment history
Amounts owed
Length of credit history
Credit mix
New credit
Every time you close an older account and open a new one, your credit is affected because your new credit is affected and, potentially, your length of credit history. Additionally, while soft credit checks used to determine loan eligibility and get quotes on your refinance don’t affect your credit, the hard credit check that happens when you actually apply for your chosen loan does show up on your credit report.
That’s why experts recommend against refinancing your vehicle when you know you have another major purchase or event coming up that will require a credit check, like buying a new house.
That said, these dings are temporary, and your credit score will typically recover in about a year. If you are worried about not being able to make on-time and full payments on your loan, for example, the minor temporary reduction in credit associated with refinancing is much preferable to negative events on your credit report like late or missed payments, which can stay on your credit report for seven years.
Still on the fence? Here’s a quick round up of answers to some of the most commonly asked questions about refinancing a vehicle loan more than once.
You can refinance as many times as you want.
Multiple refinances may or may not be beneficial depending on your unique situation, and after a certain number you may find it harder to find a lender or good deal, but there is no rule stopping you from refinancing as many times as you want.
Debt consolidation is when you combine multiple loans or debts under one new unified loan. Debt consolidation is part of the typical process for getting out of debt. Depending on the debt you’re consolidating, you may be able to secure a lower rate, lower monthly payment, or even a temporary pause in payments. Debt consolidation simplifies the process of paying down outstanding debts and can help eliminate accounts with high interest rates, like credit card debt.
With a consolidated loan, you’d likely get an unsecured personal loan or a loan based on your home equity.
The key similarity is that when you refinance your car, you get a new loan that pays off your old loan, and then you start paying back your new lender. However, an auto loan refinance replaces just one single existing line of credit—your car loan—and instead of being a general line of credit, it’s still an auto loan. That is, a refinance typically has terms like your original car loan, with just the details changed.
With an auto loan refinance, as with any auto loan, your vehicle is your collateral on the loan.
Technically speaking, you can, although not all lenders will agree to it.
Refinancing with the same lender usually won’t get you the best available deal for you. In essence, your existing lender may be motivated to keep you as a client, but any beneficial change they make to your loan reduces how much they make off of your loan. Other lenders, on the other hand, are more motivated to give you the best deal they can, because they don’t currently have your business.
Now you know all there is to know about refinancing your auto loan multiple times, and should be equipped to decide if a repeat refinance is right for you, based on your financial picture, available options, and unique needs.
Get a free, no-commitment quote to check eligibility and see how much you could save with Auto Approve today.
