Auto financing is one of the most complicated parts of buying a car. While shopping for a new or used vehicle, one’s mind might be too occupied examining all of the aspects of their potential car to consider just how much they should be paying for it in the long term.
Dealerships know this—and as many videos on the internet show, they try to use this lack of attention and confusion around numbers to their advantage. For example, one customer says that a dealership lied to her about her own credit report in an attempt to upsell her. Another shared dealership red flags, while a further auto expert noted some paperwork trickery that dealerships can employ to make you pay more in the long run.
Now, a car buying expert has sparked discussion after revealing something you might not know about when you can refinance an auto loan.
Refinancing your auto loan
In a video with over 83,000 views, TikTok user Billy (@billythecarkid) responds to a question about whether it’s a good idea to refinance your car loan. The answer, he says, is complicated.
“A lot of you are finding out that when you leave the dealership, you can’t just refinance your loan because you got such a sh*tty deal,” Billy starts. While some may close a deal and think that they can simply refinance, Bill warns that this isn’t always possible.
“For some of you, it’s going to be a lot harder than you think,” he states.
Billy continues by noting that one of the struggles people who are looking to finance have is a poor loan-to-value ratio. If your loan is significantly higher than the actual value of the car, “the loan they’re giving you towards the actual value of the vehicle, you’re 20% over what the bank thinks it’s worth,” he says. Banks are then likely to reject your refinancing application, Billy adds.
“They’re just gonna say no, and you’re gonna get a higher rate and start your loan over if they do say yes,” he states.
However, for those who “came with a healthy down payment, you did your homework, you got the best price, you didn’t get screwed on your trade, you walked out of the dealership with a pretty good deal,” Billy says that you are more likely to be able to refinance on good terms.
Next, he discusses timing regarding refinancing. In short, while a dealership may press you to wait 6 months or a similar amount of time before refinancing, Billy says you don’t always have to.
“You can refinance the second that you have an account number,” he declares. “You don’t need to wait the six months that the finance guy will probably try and tell you—that’s just so they get paid on the financing they gave you. You can do it as soon as you have an account number. You don’t even need to wait for the first payment to be due.”
@billythecarkid Replying to @j. Is it ever a good idea to refinance your car? If the interest rate you qualify for today is significantly lower than your current loan rate, it may be a good time to refinance a car. If it's the same or higher, it's probably not the right time to refinance. All of that’s going to be dependent on how much you paid for the vehicle in the first place! ##carbuying##carbuyingtips##carbuyingsecrets##carbuyingadvice ##carbuyingmadeeasy##carbuyinghacks##dealership##refinance ♬ Intense Music(850540) – Pavel
In the comments section, users shared their thoughts on Billy’s video as well as their own experiences.
“I refinanced my current vehicle like a week after I left the dealer. then my credit union gave me 90 days no payments. when the dealer found out they were pretty mad at me. ha ha oh well,” said a user.
“Wait… you don’t have to wait to refinance your loan. I was told that I was stuck for 6 months,” offered another.
“I bought my car with a 3.5% interest and refinanced 2 days later with a 1.9%,” recalled a third. “didn’t wait at all. Never made a payment to GM.”
The Daily Dot reached out to Billy via Instagram direct message.
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