How Often Can You Refinance Your Car?

You can refinance your car as often as you can get approved to do so. While some lenders impose mandatory waiting periods for in-house refinancing, most don’t when refinancing loans from other lenders. As long as you qualify, you can get a new loan and use it to pay off your current one. 

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However, refinancing too frequently or too quickly won’t always be in your best interest. Here’s what you should know. 

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How many times can you refinance a car?

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There’s no legal limit on the number of times you can refinance your car. And most auto loan lenders don’t make you wait a certain amount of time before refinancing a loan from another lender. The key question i whether refinancing at a particular time is beneficial for your situation. To find the answer, you’ll need to consider the pros and cons of refinancing before making a decision. 

When it makes sense to refinance (again)

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Refinancing your car can make sense if it improves your situation. For example, people often refinance to lower their monthly car payments, reduce their total loan costs, or both. However, qualifying for a better loan often hinges on securing a better interest rate. This is most likely to happen when: 

• Interest rates have dropped since you took out your last loan.
• Your credit has improved since you got your last loan. 
• Your debt-to-income ratio has improved since getting your last loan. 
• You're adding a cosigner to your loan to help you qualify for better rates. 

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If you’re in any of these situations, it can be a good time to shop around and run the numbers. Get quotes from at least three auto refinance lenders and compare them to your current auto loan. As you do, take note of the interest rates, fees, monthly payment amounts, total interest costs, term lengths, and customer service ratings. 

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If a new lender offers you a better value, all things considered, it can make sense to refinance. 

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Potential drawbacks of refinancing more than once

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Every time you refinance, your credit will take a temporary hit. The new lender will require you to undergo a hard credit inquiry during the application process which typically causes your credit scores to drop by a few points. Additionally, credit scores tend to be temporarily impacted when brand-new loans hit credit reports. While your credit will bounce back as you make on-time payments, eligibility for other loans may be negatively impacted in the meantime. 

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Another potential drawback is the possibility of increasing your total loan costs. Loans touting lower car payments can sound appealing but may cost more in the long run. For example, if you qualify for the same interest rate but can get a lower monthly payment by adding a year to your loan term, your overall cost is going to increase. It may be worth it in some scenarios, but it’s important to understand the trade-off. Also, beware of your equity. If the total loan cost gets too high, you could end up owing more than your car’s worth. 

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Refinancing requirements to remember

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Many lenders don’t care how many times you’ve refinanced your car but do care about other factors, such as: 

• Stable employment and income: A stable source of income that enables you to consistently cover your car loan payments. 
• Good credit: A positive credit history that shows you pay your debts as agreed.  
• Low to moderate debt: A debt-to-income ratio below a certain limit that shows you can afford your car payments.
• Positive equity: A vehicle value that exceeds the amount you owe so the asset fully secures the loan. 
• Eligible vehicle: A qualifying vehicle that isn’t excluded by make, model, age, mileage, and intended use restrictions. 
• Clean title: A vehicle with a clear, marketable title, meaning it hasn’t been salvaged, labeled a lemon, or previously damaged by flooding. 

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Eligibility requirements and specific limits will vary by lender, but these tend to be pretty common.

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Best practices for auto loan refinancing

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So, how often should you refinance your car? Whenever it benefits you to do so. Here are a few best practices to keep in mind: 

• Title transfer: Ensure your title transfer is complete before starting a new refinance to avoid confusion, delays, and possible denials. It can take a few weeks to a few months. 
• Credit recovery: Wait for your credit to recover from the last loan so you can qualify for the best possible rates and terms.
• Shop around: Shop around and compare quotes from multiple auto loan lenders to ensure you get a competitive deal. 
• Consider total costs: Calculate the total cost of each auto loan you’re considering, including fees and the interest costs for the remainder of the loan term.
• Limit hard credit inquiries: You typically only need to allow one hard credit inquiry when you want to move forward with a winning quote.  

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Waiting at least six months before refinancing is a good general guideline. It allows time for your credit to recover and your title to fully transfer. However, there may be certain situations when refinancing sooner could make sense, such as if you’re very unhappy with your current lender or get a quote you can’t refuse. 

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Want to learn more? Check out our refinancing resources. 

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FAQs

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Find quick answers to common questions about refinancing a car multiple times. 

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How soon can you refinance a car after purchase?

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It’s possible to refinance your car right after the purchase. Many auto loan lenders don’t place restrictions on how long you have to wait to refinance a car loan from another lender. However, you may run into problems if you try to refinance before your initial title transfer is complete. 

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Can I refinance my car for more than I owe?

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Yes. Some lenders offer cash-out refinance auto loans which allow you to refinance your car for more than you owe and receive the difference in cash. You’ll need to meet minimum equity thresholds to qualify. 

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‍How long do you have to wait after refinancing to refinance again?

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After refinancing, you don’t have to wait a set amount of time before you can refinance again. Lenders often let you refinance loans from other lenders right away. However, waiting periods are more common if you want to refinance with the same lender. 

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What happens if you refinance too many times?

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The result of each refinance will depend on the specifics of the loan and your situation. The biggest risks are damaging your credit, incurring fees, increasing your total loan costs, and owing more than your car is worth. 

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What is the 6-month refinance rule?

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The six-month refinance rule suggests waiting at least six months after securing an auto loan before refinancing. This timeframe allows the title transfer to process and gives your credit score a chance to recover from any temporary dips caused by the initial loan.

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