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Should I Refinance My Car Loan in Summer 2023?

Finance | 06/12/2023 00:53

Summer is a great time to recharge and refresh with vacations, trips to the beach, and relaxing afternoons at home enjoying the beautiful weather. But it can also be a great time to check in with our finances and get a restart before the hustle and bustle of fall comes our way. If you have a car that is financed, you may be wondering if a car loan refinance will help you save some cash. 

Here’s how you can tell if you should refinance your car loan in summer 2023.


What is car loan refinancing?

Car loan refinancing is when you get a new car loan that will replace your existing loan. Refinancing a loan will help you to get a better interest rate, change your repayment period, and change who is or is not a cosigner on the loan.

When you refinance your loan you will go through the same process as you did during your initial financing. You will research lenders, apply for a loan, and select the loan that has the best terms, conditions, and car loan interest rate. And that’s it! It’s incredibly simple, and there are companies out there like Auto Approve who can help you navigate the world of refinance and help you through the application process. When you select a loan that is right for you, your new lender will pay off your old loan directly and you will begin making payments to your new lender. And voila–your loan is refinanced and you can start saving money immediately. 

When should you refinance your car loan?

There are a number of signs that the time is right to refinance your car loan. You should know the terms and conditions of your existing loan before you seek refinance, as this will help ensure that the new loan you get will be better.

Your credit score has improved.

The car loan APR that you are offered is very dependent on your credit score. In fact your credit score is the biggest factor that you have control over when it comes to securing a loan. The rate that you are offered will be based on what credit tier you are in. Your credit score will fall into one the following categories:

  • 800 to 850: Excellent

  • 740 to 799: Very good

  • 670 to 739: Good

  • 580 to 669: Fair

  • 300 to 579: Poor


In general you will be offered a good car loan interest rate if your credit score is in the very good and excellent range. As your score decreases, the interest rate that you will be offered will increase. 

Your credit score is based on five key factors in your personal finance: your payment history, credit utilization, length of credit history, credit mix, and new credit accounts. There are many reasons why your credit may have increased since your initial financing:

  • You paid off some debt.

  • You have been making consistent on time payments.

  • Your available credit increased.

  • You had a negative event expire.

  • And more.

Any improvement to your credit score can help save you a lot of money in interest, especially if it bumps you into a different category. But in general if there has been an increase to your credit score it is a good idea to think about car loan refinancing.

You want to change your repayment period.

Another benefit of refinancing is that you can change your repayment period. There are two ways that this can help you: it can either save you money or it can buy you some breathing room in your monthly finances. If you shorten your repayment period you will be paying off your loan quicker and you will therefore spend less money overall on interest. This will make your monthly payments higher, but you will save money in the long run.


On the other hand, if you are having trouble making your payments every month, lengthening your repayment period will allow you to greatly reduce your monthly payments. Since you will be paying the loan off over a longer period, the principal will stretch out and easily cut your payment by hundreds per month. You should note that you will be paying more interest over the life of the loan, but this may be worth it if it can make your monthly budget work for you. 

The market rates have decreased.

The refinance rate that you will be offered will be based in part on the current market rates. If the current rates are lower than they were when you initially financed your car, you may be offered a lower car loan refinance rate.

You are in a bad relationship with your current lender.

Sometimes we end up in bad relationships. Maybe you don’t like the customer service and have had a few too many bad interactions. Maybe they have hit you with fees and penalties that you do not find fair. Maybe they have been unresponsive and unhelpful. Whatever the reason is, refinancing your car loan can help you get out of a bad spot with your current lender.

You want to add or remove a cosigner. 

If you want to add or remove a cosigner from your current loan, refinancing your loan is going to be your best option. 

What do I need to refinance my car loan?

In order to refinance your loan you will need to have the following documents: 

  • Proof of employment or income (a paycheck stub or tax return)

  • Proof of car insurance.

  • A valid driver’s license.

  • Proof of residence. This is required if your driver’s license and credit report address don’t match. A utility bill is usually sufficient for this.  

  • Your car’s registration.

  • Your vehicle’s information: model, make, year and vehicle identification number (VIN)

  • Your current lender’s information and loan information, including the payoff amount.

  • A photo of your car’s odometer


Some lenders may require more information or paperwork, but these are the standard documents that most lenders will want.


Is summer 2023 a good time to refinance my car loan?

So is now a good time for car loan refinance? It really depends on your situation. The current market rates are not particularly low right now, but that might not matter for you. The rates might still be lower than when you originally financed, and if your credit score increased then you might be eligible for a much better interest rate.  If you are looking for some breathing room, refinancing to a longer repayment period can really help you out of a tight spot. The best thing you can do is to look at your finances and determine if you could benefit from car loan refinance. 


That’s how you can know if car loan refinancing is right for you in summer 2023.


Contact Auto Approve to find out how much money you could be saving!


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*APR and Fees Disclosure: Auto Approve works to find you the best Annual Percentage Rate (APR), which is based on factors like your credit history, vehicle and desired payment terms. Fees to complete your loan refinance vary by state and lender; they generally include admin fees, doc fees, DMV and title. Advertised 6.24% APR based on: 2019 model year or newer vehicle, 730 minimum FICO credit score, and loan term up to 72 months. All loans subject to credit and lender approval.
Auto Approve has an A+ rating with the BBB and is located at 2860 Vicksburg Lane North Plymouth, MN 55447. Auto Approve works to find its customers the best terms and APR, which are based on factors like credit history, vehicle, and desired payment terms. Loan amounts, costs, and fees vary by state and lender; they generally include admin fees, doc fees, DMV, and title fees, depending on the lender and period of repayment. There is no fee to obtain a quote and all refinancing-related costs are included in the amount financed so there are no out-of-pocket costs! For more information, please go to AutoApprove.com.