back to articles | August 08, 2026 | Greg Thibodeau

Categories: Refinance To Save

Refinancing Your Auto Loan: What You Need to Know

Refinancing your auto loan can lead to lower interest rates and monthly payments, but it's essential to understand its impact on your credit score and overall financial health.


Thinking about refinancing your auto loan? It's a move that could save you money, but it's important to understand how it might affect your credit score and overall financial situation.

How Refinancing Impacts Your Credit Score

When you apply to refinance your auto loan, lenders perform a hard inquiry on your credit report. This can cause a slight, temporary dip in your credit score. However, if you submit multiple applications within a short periodtypically 14 to 45 dayscredit scoring models often treat them as a single inquiry, minimizing the impact. Bankrate explains that while refinancing may temporarily lower your credit score by a few points, the financial benefits can outweigh this short-term effect.

Additionally, opening a new loan account can shorten the average age of your credit accounts, which may slightly affect your score. However, maintaining consistent, on-time payments on your new loan can help your credit score recover over time.

Potential Benefits of Refinancing

Refinancing can offer several advantages:

  • Lower Interest Rates: If your credit score has improved since you took out your original loan, you might qualify for a lower interest rate, reducing the total cost of your loan.
  • Reduced Monthly Payments: Extending the loan term can lower your monthly payments, providing more room in your budget. However, this may increase the total interest paid over the life of the loan.

It's crucial to weigh these benefits against any potential downsides, such as prepayment penalties on your existing loan or fees associated with the new loan.

Is Refinancing Right for You?

Consider refinancing if:

  • Your credit score has improved, making you eligible for better loan terms.
  • Interest rates have dropped since you secured your original loan.
  • You need to adjust your monthly payments to better fit your current financial situation.

Before making a decision, review your current loan terms, check your credit score, and compare offers from multiple lenders. This approach ensures you make an informed choice that aligns with your financial goals.

For more information on auto loan refinancing, you can refer to Experian's guide.

At myAutoloan.com, we offer tools and resources to help you navigate the refinancing process. Use our auto payment calculator to estimate your new monthly payments and explore our auto refinance options to find a solution that fits your needs.