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What Are the Ramifications About Refinancing My Car Loan? – Jessica

“Dear Steve,

I have a really high car payment and no income. The car absolutely cannot go back. I had to trade in two vehicles because I signed (not cosigned) for my mother in law to get a Smart car, and she died.

My father in law did not want to keep making payments and pay insurance so we traded in my car and the Smart car. My SUV is financed for 6 years at a 4% rate I think. It was the lowest I could get. The car is in my father’s name, and I cosigned. We both have great credit scores. I am curious about refinancing.

What are the financial ramifications of refinancing? How is it done? Will it have any negative impact on our credit scores? Will it lower the payment significantly enough to be worth the trouble?


Dear Jessica,

Wow, sorry to hear about the loss of your mother-in-law.

Refinancing the car loan can be a really smart thing to do. I’ve done it in the past.

But, it is unlikely you will find a lender that will go six years or as low as 4% to replace the loan with one that will have lower payments. To lower the payments you will either need to extend the length of the loan at the same interest rate or find a lower interest rate loan.

The most likely places for find a consolidation loan are or but you are not ring to find an interest as low as what you have now. I did a quick search and noticed that Capital One is offering rates at 4.19% for 72 months.

Please post your responses and follow-up messages to me on this in the comments section below.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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