Key takeaways

  • There is not a legal limit on how many times you can refinance your car.
  • It can make sense to refinance again if you can get better rates, lower payments, better terms or other perks like cash back.
  • You will have to work with the lender to see if you can refinance, as lenders have requirements for refinancing relating to time left on the loan, the amount of the loan and the age, value and mileage of the vehicle.
  • If you cannot refinance the vehicle, look into other ways to lower or eliminate your monthly payments like selling the car privately, switching to a less expensive car or modifying the loan.

You refinanced your car some time ago, but now you’re curious how often you can refinance your car if you find a better rate. Or maybe you’re considering a refinance and wonder if you can refinance again later. Either way, you’re asking: how many times can you refinance a car?

It could be a wise decision and lead to a better refinance rate. However, you should understand the benefits, drawbacks and requirements of refinancing before moving forward. You may find that other options that don’t involve refinancing are better.

How often can you refinance your car?

If you’ve already refinanced your car, you can do it again. In fact, there’s no legal limit on the number of times you can refinance if you’re able to find a lender willing to assist you with the transaction.

“Vehicle refinancing is only limited to the age and value of the vehicle,” says Christina Naylor, chief operations officer at Carolina Trust Federal Credit Union.

However, after refinancing several times, you could find it more challenging to secure a new auto loan with competitive terms. Some lenders charge steeper interest rates as the risk of default is higher.

“The question is, why do they keep refinancing?” Naylor says. “Are they using the equity or cash out to pay down revolving debt and then immediately running up the credit card balances again? That is a risk for the lender, and it’s a bad strategy for the borrower.”

How soon can you refinance a car loan?

There’s no legal requirement for a waiting period for refinancing. If a lender is willing to refinance your loan soon after it’s funded, you could be in luck. However, lenders also often want to see at least six months of payments on your current loan and six months before considering a refinance.

Still, it may not be a smart financial decision, particularly if you’re considering a refinance when the depreciation rate is at its highest early in the car’s life.

Why you may not want to refinance more than once

Although it often results in cost savings, there are instances where refinancing more than once isn’t sensible.

  • You may face a prepayment penalty. Your current lender could charge you a prepayment penalty for paying the loan off early.
  • Fees add up. There are also loan origination and title transfer fees, which are standard with refinancing transactions. These costs and the additional interest you may pay if you extend the loan term can add up after several refinances.
  • You may owe more than the car is worth. You’ll generally find that refinancing more than once and extending the term causes you to owe more than the car’s worth, also called being upside down on your auto loan. This can be problematic if you wish to trade or sell your car before it’s paid off or if your vehicle becomes inoperable.
  • You may damage your credit score. Credit inquiries linger on your credit report for up to two years but only impact your score for 12 months. If you refinance more than once within a short period, the additional inquiries may slightly ding your score. You may also affect your account age by refinancing, though this only makes up about 15 percent of your FICO score.

Learn more about auto financing pros and cons in our guide.

When it might be a good idea to refinance again

There are occasions when it makes sense to refinance your car more than once:

  • You need another break on your monthly payment due to other financial goals or decreased income.
  • Your credit score has increased since your last refinance.
  • It has been at least six months of paying your current loan.
  • The loan is through a dealership or lender you don’t like, and you can find better rates or terms elsewhere.
  • Interest rates are lower than when you first refinanced.

Refinancing requirements

How many times you’ve refinanced your loan matters less than whether you meet other lender requirements for refinancing your car. These might include:

  • Age: Most lenders require that your car is no more than 10 years old. But if you are refinancing for a second, third or even fourth time, your car’s age may exceed the limit, making it ineligible for refinancing.
  • Value: The vehicle should not be worth less than you owe on the loan. It’s easy to get upside down in your auto loan if you refinance more than once, making this requirement problematic for some borrowers.
  • Mileage: Most lenders limit vehicle mileage to 100,000 or 150,000 miles on refinances. If you’ve had the car for some time, you may have accumulated far more miles than many lenders allow.
  • Time left on loan: The lender may require that a certain amount of time be left on the loan to refinance. For instance, some may allow refinancing with at least six months left on the loan.
  • Amount left on loan: Lenders also have minimum borrowing amounts so that they can make sufficient interest on the loan, often between $5,000 and $10,000.

 Other ways to lower your monthly payment

If you want to save on your monthly payment but find that refinancing isn’t the right fit, consider these alternatives:

  • Modify your loan. Contact your lender and ask to speak to someone in the loss mitigation department to modify your car loan. Notify the representative that you’re experiencing financial hardship and inquire about options to make your auto loan more affordable and avoid repossession.
  • Swap your car for a cheaper option. Explore the inventory at local dealerships and make a list of vehicles with lower price points and monthly payments that won’t stretch your budget too thin. Narrow down your list of options, visit the dealership and negotiate a deal that gets you a fair price for your trade-in and the car you purchase.
  • Sell your car privately. You may get top dollar for your vehicle by selling it on your own. Once the transaction is complete, use those funds to make a down payment on a new or used car.

Next steps

Whether your credit has improved or interest rates are better since you last refinanced, you may consider refinancing again. But you’ll have to confirm refinancing benefits you by offering lower monthly payments, better terms or cash-back options. Also, check with lenders to ensure you meet the requirements to refinance again.

Consider modifying your loan to get a better deal if refinancing doesn’t make financial sense. You can also trade your car in or sell it privately if refinancing isn’t your best option.