My dealership advised me to wait 6 months after purchasing a vehicle to refinance, but is that necessary? Would it be better for me to just sell this car and move into a new, more affordable loan? Should I refinance my car today, or should I wait for a better deal? Let’s discuss the details that play a huge role in deciding if refinancing is right for you!
Most dealerships advise you to wait 6 months to refinance your vehicle because they will lose commissions or get charge-backs from their partners if you move away from that loan in less than 180 days. However, as this is your loan and your money, it’s entirely your decision on when you choose to refinance!
You’re not legally bound to wait 6 months, and if you’re paying a high-interest rate or payment that isn’t comfortable for your budget, you need to ask yourself what’s more important, your finances or the dealership’s profits? Furthermore, if you protected your loan with GAP or a Vehicle Service Contract, you may also be due a substantial pro-rated refund for the unused portion of those policies. Learn more from Don't Leave Money On The Table.
This is one of the most common questions we hear, and unfortunately, there is not a blanket answer that is right for everyone. To answer this question for yourself, you first need to answer the following question:
What is your Loan-to-Value (LTV) ratio?
If you owe $30,000 on your vehicle but the vehicle value has depreciated to $25,000, then you have $5,000 in negative equity on your loan. This negative equity makes your LTV 120% (30,000/25,000).
The higher your LTV, the higher risk you are to a lender because the collateral backing your loan is losing value faster than you are paying off the loan. This creates a risky financial position, and selling your vehicle means that you will have to take a $5,000 loss before you can even buy a new one!
If you aren’t able to refinance the loan at a better rate and you also can’t afford your current car payment, this may be your only option short of making your current lender repossess your vehicle. A repossession should try to be avoided at all costs since it will greatly hurt your credit score and diminish your chances of getting approved for a future loan or trade-line. Bankruptcies bring similar results.
If you love your car but hate your payment, refinancing is the perfect option for you! Refinancing allows you to keep the vehicle you love but restructure your loan with a new bank that can either lower your interest rate, lower your payment, or both! Shopping around for the best deal and putting up with pushy salesmen can be exhausting, but Chippr allows you to see real, pre-qualified offers, coming directly from partnering lenders without having to talk to anyone on the phone. You can see the new loans you qualify for in under 5 minutes — with no effect on your credit score and no obligation to buy extra products.
