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Can I Lower My Auto Interest Rate Without Refinancing?

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If you want to lower the interest rate on your car loan, a refinance is the way to go. But there are times when a refinance might not be in the cards. Can you still lower the interest rate on your loan without refinancing?

Getting your lender to lower your rate without a refinance is exceedingly tricky. You agreed to the terms of the loan when you signed on the dotted line, and the lender has no reason to back away from that agreement voluntarily, especially if it is not in the lender’s financial interest to do so.

In addition, there is a good chance your lender has already sold your auto loan to a financial investor. In such situations, the lender is obligated to the investor to keep the loan terms in place exactly as they were initially established.

If you want help from the lender in lowering your rate, a refinance is almost certainly your best option. However, there are situations where you might not be eligible for a refinance — if your credit has taken a hit, for instance, or if your car is too old or has too many miles on it.

If you are in this situation, your best bet for lowering your auto loan costs is to take matters into your own hands. Paying down your car loan as fast as you can is one way to reduce your costs. By doing so, you will, in essence, shorten the term of your loan. That means you will pay less in interest costs, directly saving you a lot of money.

It is important to note that while paying down your loan will lower your overall interest costs, it will not lower your interest rate. Nor will it lower your monthly payment. Instead, it will simply reduce the overall cost of purchasing your car by shortening the loan term.

There may be rare situations where a lender is willing to find creative ways to change the terms of your repayment schedule if it fears you are in financial trouble and might default on the loan. Some (though not all) lenders even have hardship programs designed for this purpose. But the process of getting a loan modification can be difficult and time-consuming, and you likely will need to prove proof of financial difficulties to be eligible for such a modification.