How Soon Can You Refinance a Car After You Buy It?

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Key takeaways

Your new car’s registration, title and loan paperwork must be processed before you can refinance. This usually takes 60 to 90 days.
It may be best to wait at least six months before refinancing so you can rebound from the original loan’s hard credit hit.
How soon you can refinance your car also depends on how fast you can get approved for a new loan.

How soon can you refinance a car loan?

If your lender doesn’t have a seasoning period, then you can refinance your auto loan as soon as the title, registration and loan paperwork is processed. This can take 60 to 90 days, and it generally does. But if you’re lucky, you may be able to refinance a few weeks after purchase.

After you drive off the lot, the action doesn’t stop there. The dealer must start transferring the title. Paperwork has to change hands — from finance managers to processing departments, then from processing departments to the lender and DMV. Once the paperwork gets to their final destination, they have to be processed by the receiver.

If you’re trading in a car that has an auto loan, the process is usually slower. Your new lender must pay the remaining balance on the old loan before the title can be transferred. All of these factors determine how soon you can refinance a car loan.

Seasoning periods and prepayment penalties

Some car loans have a seasoning period. This is the length of time in which the lender prohibits you from refinancing. Some car loans also have a prepayment penalty, which is an extra charge if you pay your car loan off early (which you would be doing by refinancing).

Check your loan paperwork for more information.

When can I refinance my car? A timeline

Refinancing a car loan within the first three months

Regardless of whether your current auto loan lets you or not, you can’t refinance until the title for your vehicle has been processed and ownership has been transferred to your new lender. This process typically takes at least two or three months.

Something else to consider is your credit score. It likely took a hit from applying for the new loan and adding a sizable new debt to your credit report. If you’re looking to refinance into a lower rate, you might want to give your score a little time to recover so you can qualify for the best terms possible.

Refinancing a car loan after six months

After six months of on-time payments, you may have improved your credit score and regained some of the points you may have lost by taking out your original auto loan. You want your score to be in as good a shape as possible when you go to refinance, so you can get the lowest rate.

Six months might be a good time to refinance a car loan before interest rates change, assuming rates are trending upward. At that point in your loan, you’ve paid a good chunk of interest, but not so much that refinancing is no longer a good idea (more on that below).

Refinancing if you’re more than halfway through your loan term

Interest is usually front-loaded on a car loan. That means most of your first year’s worth of payments go more toward interest than they do principal. Over the life of your loan, the amount of interest you owe goes down since you paid it in the beginning.

But if you refinance too far into your loan term, the savings you gain from refinancing might not be enough to offset the interest you’ve already paid on the first loan.

Still aren’t sure if you should refinance? We’ve got a guide for that.

Author’s insight: Refinancing isn’t always about saving interest

I refinanced my last car loan pretty late — three and a half years into a five-year term. I didn’t refinance to save interest. I refinanced to save my car, as my family experienced a job loss.

My new loan had a long term, which brought down monthly payments. I knew I’d pay more interest, but in my financial situation, the extra interest was worth it.

When we were back on our feet, I started paying more than the minimum amount to pay off my car faster and skip as much interest as I could.

– Carol Pope, senior staff writer

How soon can you get approved for a car refinance?

If you want to refinance your car fast, you also have to consider how long it’ll take you to get approved for a new loan. How easy (and quickly) approval is depends on a few factors.

It can take longer to get approved for auto refinancing if:

You have bad credit. It’s possible to refinance your car with bad credit, but the process isn’t always easy. You’ll have to seek out lenders that work with lower scores, and the high rates may not be worth it.
You have low, unstable or hard-to-prove income. If you don’t make much or get paid sporadically, it’s going to be harder to meet an auto refinance lender’s income requirement. If you get paid under the table, you probably won’t qualify at all.
Your car is older, has higher mileage or is lower value. Refinance lenders have requirements about the age, value and mileage of the cars they’ll refinance. If your car is older, has a lot of miles or if you owe more than the car is worth, you might not qualify.

It can be faster to get approved for car refinancing if:

You have excellent credit. When you have excellent credit (740+), refinance lenders should be clamoring for your business. You’ll also have a wider selection of lenders to choose from.
You apply online or choose an online lender. Refinancing your car can be quicker and easier if you don’t have to leave your house to do it.
You shop around with a loan marketplace. The wider the net you cast, the faster you catch a fish. That’s one of the ideas of using a loan marketplace like LendingTree. In just two minutes, you can compare rates on the nation’s largest network of lenders.

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