The pros
- A lower interest rate on the same balance, which usually means a lower payment and less total interest.
- No trade-in, no new vehicle purchase, and no sales tax on the transaction.
- You can shorten the term to get out of debt sooner, or lengthen it temporarily to protect cash flow.
- A co-signer can be removed once you qualify on your own.
- Your existing insurance, registration and plates stay exactly as they are.
The cons
Refinancing resets a clock. If you were 14 months from paying the car off, a new 48 month term is a step backwards unless the rate is dramatically lower.
- Early payoff penalties or discharge fees on the current loan can cancel the first year of savings.
- A longer term lowers the payment while raising the total interest paid.
- If you are far upside down, the vehicle may not qualify or may need a down payment.
- Each application can involve a credit inquiry, which may cause a small temporary dip.
The rule of thumb
If the new rate is at least two points lower and you have more than 18 months left on the loan, refinancing usually wins. If the rate difference is smaller, ask whether fees and the reset term still leave you ahead.
Save thousands
Save thousands by refinancing your vehicle anywhere in Canada.
Free to apply, no obligation, and no credit check to pre-qualify.
Frequently asked questions
A pre-qualification is not a credit check. A full application may involve one inquiry, and consistent payments afterwards usually improve your profile over time.
Only if it extends a nearly finished loan, adds fees you did not need, or is used to lower a payment on a vehicle you cannot really afford.
Trading in creates a new purchase, new taxes and a fresh depreciation curve. Refinancing keeps the vehicle and only changes the financing, which is almost always cheaper.