What is refinancing a car loan?

Refinancing a car loan means paying off all current auto loans and starting a new car loan with another bank or the same bank as before to reduce the interest rate.

The advantages of refinancing include:

1. A cheaper monthly vehicle loan payment.

2. A lower interest rate.

3. Receiving extra money through refinancing.

The disadvantages are having to pay a car loan for a longer period of time and having to pay money during the process.

Before refinancing a car loan, you must pay at least 50% of the current loan balance. For example, if you have a 6-year car loan, you must pay for at least three years.