Refinancing your car loan can save you money, but there are potential roadblocks

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KEY TAKEAWAYS

Financial planner Shane Stewart discussed the recently competitive refinancing market for car loans.
Stewart said refinancing is an option if interest rates drop significantly, your credit score rises, or you have a strong credit history.
He added refinancing may not suit those with older cars or nearly paid-off loans.

SALT LAKE CITY — When you've financed a car, you've agreed to a certain monthly payment at a certain interest rate for a certain number of months. Now, you can redo your car loan with refinancing that can change those terms and possibly save you money. But it might not always be the right move.

Buying a car to get from Point A to Point B just keeps getting more expensive. Edmunds.com, recently looking into auto sales made in the U.S. from April to June, found payments for new cars averaged out at $756 per month.

We emphasize average, because nearly 1 in 5 drivers (19.3%) agreed to pay over $1,000 per month for their new ride.

Those numbers caught the attention of certified financial planner Shane Stewart, of Deseret Mutual Benefit Administrators.

"I think that's why people are looking to refinance and why lenders are all of a sudden saying, 'Oh, you have a pretty heavy monthly amount,'" Stewart said.

Many big-name lenders — Bank of America, Capital One and Chase, among others — are now offering auto loan refinancing with the lure of possible lower monthly payments.

"It's becoming incredibly competitive right now," said Stewart. "The amount that people are borrowing is way up, and the cost of the car is way up. It's becoming a little more lucrative."

When to refinance your car loan

Stewart said refinancing your car loan can help if interest rates have dropped since you bought the car, and/or you've established a stronger credit history since, and/or if your credit score has gone up.

Financial planner Shane Stewart talks with KSL-TV's Matt Gephardt, Wednesday. Stewart said people with strong credit scores or histories can refinance their car loan. (Photo: Jackson Grimm, KSL-TV)

"As that credit score improves, you might be able to get a better rate, and why not? That is a great reason to refinance," he said.

If the new rate is substantially lower than your current rate, you might end up with both a lower monthly payment and a shorter loan. But Stewart said this won't always be the case.

Depending on several factors, you might get a new loan that's shorter but with higher monthly payments. Or a lender might offer you lower monthly rates but on a longer loan.

"You don't want a loan so far out that it outlives the depreciation of your car," Stewart warned.

Still, he said refinancing done right could save you hundreds, even thousands, over the life of your car loan.

When you shouldn't try

If you've already paid off most of your car loan, refinancing probably won't be the right call for you. Or if your car is older than seven years, or closing in on 100,000 miles, many lenders will consider it too old and worn to refinance.

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The Key Takeaways for this article were generated with the assistance of large language models and reviewed by our editorial team. The article, itself, is solely human-written.

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Matt Gephardt

You might say that Matt Gephardt was born into journalism. On the day he arrived at the Indiana hospital, his father, a reporter, had to quickly rush away after the delivery in order to front a news report. Matt’s television debut came a few years later when, as a toddler, he was used by an Indianapolis reporter to demonstrate how prescription drugs can be mistaken for candy. Matt’s “professional” career in the business began when he was 17 years old, attending high school in Los Angeles, and he landed a summer-job as a teleprompter operator in the Salt Lake City market. He moved to Utah, enrolled at the University of Utah, and never looked back. In the more than 20 years since, Matt has worked virtually every newsroom job: production crew, video editing, video photography, producing, executive producing. In 2010, Matt made the jump in front of the camera as an investigative “watchdog” reporter. Matt’s reporting has not only earned him several journalism awards, it has also led to law and policy changes at local, state and federal levels. When not investigating on behalf of Utah consumers, Matt enjoys “urban hiking” with his wife and three children – setting out on foot towards Sugarhouse or Downtown hoping to run into a friendly group of people gathered at a park, a festival or a new store or restaurant to try out. Matt is absolutely thrilled to be working at KSL where the commitment to ethical journalism, fairness and community is in lockstep with his own ideals.

Sloan Schrage

Sloan Schrage started as an “old man” intern with KSL TV in 2007. For the past ten years, he’s produced daily and investigative stories that impact safety, security and wallets of Utah consumers. When he’s not at KSL, he’s either with his family or trying to repair cars with help from YouTube tutorials, or buying cameras or other photography gear that he’ll never use.

Refinancing your car loan can save you money, but there are potential roadblocks

By Matt Gephardt and Sloan Schrage, KSL | Posted - July 31, 2025 at 5:02 p.m.

When to refinance your car loan