You can refinance a car loan more than once, but doing so isn’t always a good idea.
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You can refinance your car as often as you can find a lender willing to approve a new loan, but finding a lender to refinance again and again could be difficult.
When you refinance, you’re replacing your current car loan with a new one — almost always with a different lender. Since most lenders won’t refinance their own loans, youre likely to need approval from a new lender each time.
Also, the most common reasons for refinancing a car loan are to save money, lower the monthly payment or pay off the loan sooner. Once you’ve refinanced to meet one or more of these goals, it may not be easy finding another loan that provides any additional benefit.
Refinancing your auto loan can help lower your monthly payments, get you a better interest rate, or put some cash in your pocket. But refinancing comes with costs like origination fees and higher total interest paid over the life of the loan. So when does it make sense to refinance your car loan multiple times?
There’s No Legal Limit on Refinancing
The first thing to know is there is no legal limit to how many times you can refinance an auto loan As long as you can find a lender willing to refinance your loan, you can do it as many times as you want
However, just because you can refinance over and over doesn’t mean you should Each refinance comes with costs that can add up quickly. Multiple refinances in a short timeframe can also signal to lenders that you are struggling financially
So while you won’t hit a legal wall when refinancing, at a certain point lenders may stop approving you or start charging higher interest rates.
When Refinancing Again Makes Sense
Here are some good reasons to refinance your car loan more than once:
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Lower monthly payment: If your finances have changed and you need to free up room in your budget, a refinance leading to a lower monthly payment can help.
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Improved credit score: Refinancing at a lower rate can save money if your credit score has increased significantly since your last refinance.
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Lower market interest rates: Interest rate decreases may open up better refinancing opportunities compared to your existing loan’s rate.
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Six months have passed: Many lenders require at least six months of payment history before approving a refinance. If it’s been six months or more since your last refinance, it may be time to look at options again.
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Cash-back and other incentives: Lenders sometimes offer bonuses like cash back or 90 days until first payment to entice borrowers to refinance. Taking advantage of an incentive like this could make refinancing worthwhile.
When to Think Twice About Refinancing Again
On the other hand, here are some reasons refinancing again may not be the best move:
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Prepayment penalties: Your current lender may charge you a penalty for paying off the loan early through refinancing. Prepayment penalties can reach into the thousands of dollars.
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Accumulating fees: Origination fees, documentation fees, and more can add up each time you refinance. This is in addition to extra interest paid from any term extensions.
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Owing more than car’s value: Repeated refinances, especially when extending the loan term, can leave you owing far more than the car is worth. This creates problems if you need to sell or trade it in.
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Credit score impact: Too many credit checks in a short period can temporarily knock down your credit score. Your “length of credit history” factor may also take a hit with each refinance.
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** Hassle factor:** The refinancing process requires paperwork and time. Doing this over and over can become a pain.
Refinancing Requirements Get Stricter
Lenders have requirements borrowers must meet to qualify for refinancing. Even if you’ve refinanced multiple times already, here are some typical requirements:
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Loan balance remaining: Many lenders require a minimum loan balance left, often $5,000 – $7,500.
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Time remaining: Some lenders mandate at least six months left on the loan term before refinancing.
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Car value: The vehicle must be worth more than the payoff amount. If not, you are “upside down” and many lenders will deny the refinance.
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Car age: Lenders usually require cars to be less than 10 years old for refinancing.
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Mileage limit: Most lenders cap mileage at 100,000 or 150,000 miles when refinancing. High mileage vehicles may not qualify.
Meeting these requirements can be difficult for those who have refinanced several times previously. That’s especially true if you’ve extended your loan term.
Alternatives Beyond Refinancing
If refinancing no longer makes sense for your situation, here are alternatives to reduce your payment:
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Loan modification: Ask your lender to modify the loan terms to make it more affordable. This avoids fees and credit checks associated with refinancing.
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Sell the car: Selling the car privately can bring in funds to buy a less expensive replacement. This may lower your payment while avoiding another loan.
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Trade it in: Trading in your current vehicle for something more budget-friendly is another option to lower your payment.
The Bottom Line
Refinancing your auto loan repeatedly can save money in the right circumstances. But excess refinancing can create bigger long term problems. Before taking the plunge on refinancing yet again, scrutinize the costs and ensure the benefits outweigh any drawbacks for your situation.
Reasons you might refinance a car loan more than once
Throughout the life of your auto loan, you may experience different situations when refinancing makes sense — leading you to refinance more than once. Here are some examples:
- Your credit has improved. If your car loan has a high interest rate because of previous credit problems or no credit history, and you’ve made on-time loan payments for six to 12 months, you might now be able to qualify for an auto refinance loan with a lower rate.
- You need a lower monthly car payment. If your financial situation has worsened — for example, you changed jobs and took a cut in pay — you might need to refinance to a longer loan term for a lower payment that you can afford.
- Interest rates are dropping. If auto loan rates in general are decreasing, you might want to refinance more than once, especially if your original loan had a very high rate. Most lenders recommend a rate reduction of at least 1% to get the most from refinancing.
Why refinancing a car over and over can be a bad idea
Before you refinance your car multiple times, be aware of some potential disadvantages.
- Paying more than you save. Refinancing is applying for a new loan, which can come with loan origination fees, lender processing fees and title transfer fees. Occasionally, you could have prepayment penalties for your current loan. And if you extend the loan term, you’ll likely increase the amount of interest you pay overall. So before you refinance, consider whether the benefits outweigh your total cost.
- Lowering your credit score. Each time you get approved for a new auto refinance loan, the lender runs a hard inquiry on your credit report, which causes a slight, temporary drop in your credit score. In most cases, your score rebounds in a few months, but it’s still something to consider if you plan to apply for any other types of loans during that time.
- Owing more than your car is worth. If you keep refinancing your car to a longer term, you can become upside down on your car loan. While you’re taking extra time to pay off your car, it’s most likely depreciating in value, and at some point, you may owe more than you could get for the car if you decide to sell it or if its totaled in an accident.
Also, most lenders have vehicle age and mileage limits for refinancing, so if you keep extending the loan on an older car, it could become ineligible for refinancing.
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How Many Times Can You Refinance A Car? – Car Performance Pros
FAQ
Is it good to refinance your car twice?
You can refinance a car loan as many times as you like, but doing so too many times can have a negative impact on your credit and result in prepayment …Mar 31, 2025
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However, you’ll typically want to wait at least six months after getting your initial loan and avoid refinancing too often, which can lower your credit score. If you’re considering refinancing your auto loan, check your credit report and credit score first and take steps to improve your credit score if need be.
Does refinancing a car hurt your credit?