 TITLE: Will Refinancing My Auto Loan Hurt My Credit? CONTENT: How Does Refinancing an Auto Loan Work?\n---------------------------------------\nTo refinance a car loan, you'll use a new loan to pay off what's left on your current car loan, ideally securing yourself a lower interest rate or lower monthly payment in the process.\nThe process of finding this new loan will go much the same way it did when you initially financed the car, meaning you'll be able to apply to multiple lenders and compare interest rates and fees to find the loan with the best terms.\nOnce you accept a loan offer, the refinancing lender sends a payment for the remaining balance on your loan to the lender that originally issued it. The new lender then takes over the lien on the car (the legal right to take possession of the car if you fail to make your payments). You'll make monthly payments to the refinance lender until you've paid off the new loan.\nWhen deciding whether to refinance your car, and which lender to refinance with, you should focus on one or both of these objectives:\n*   **Save on interest.** Refinancing can reduce the total amount you'll pay for your car if your new loan has a lower interest rate. Since auto loans can be for tens of thousands of dollars, even a 1 percentage point difference can net you significant savings over the life of your loan.  \n    Remember, though, that any fees the lender charges to issue the new loan (origination fees) will reduce those savings. You also may not benefit from a refinance much or at all if you don't have much left to pay on your loan. Before refinancing, make sure you'll actually save money by calculating your interest savings and comparing it the total costs of each loan, taking fees into account.\n*   **Reduce your monthly payment.** If household expenses have increased since you took out your car loan, or if you'd just like a little more breathing room in your monthly budget, you can use refinancing to lower your monthly payments. This typically entails getting a new loan that extends your original payback period by six months or more. You'll likely end up paying more in interest, but by spreading out your repayment, you're reducing how much you need to pay every month. Refinancing to reduce your payment may be worthwhile if it helps you avoid missing a car payment or any of your other bill payments. END