How Soon Can I Refinance My Car Loan In Texas?

Refinancing your car loan can help you save, but timing matters – especially in Texas. Learn how soon you can refinance, what to consider, and how to decide if it’s the right move.

If your car loan is in good standing, you may have options to make your terms work better for you – and one of the most popular is auto loan refinancing. Refinancing means replacing your current loan with a new one that may offer benefits like a lower interest rate, a more affordable monthly payment, or a new lender better suited to your needs.

While refinancing can be a powerful financial tool, it’s not something you should rush into, especially if you live in Texas. State regulations, fees, and timing can all impact whether refinancing truly saves you money. That’s why many drivers ask the important question: How soon can I refinance my car?

At A+ Federal Credit Union (A+FCU), we’ve helped Central Texans refinance millions in auto loans, and we’ve put together this guide to help you decide if refinancing is right for you. You’ll learn when it makes sense to refinance, what it may cost, how it could impact your credit, and what to expect when refinancing with a trusted local lender like A+FCU.

How Soon Can You Refinance Your Car?

Texas doesn’t have a legal waiting period before you can refinance your car. That means you can technically begin the refinancing process as soon as your original loan is active, but that doesn’t always mean it’s the right time.

In most cases, lenders prefer that you wait at least 30 to 90 days. This allows time for:

• The vehicle title to transfer into your name
• Your loan to be fully funded and reported to the credit bureaus
• Equity to begin building in the vehicle
• A pattern of on-time payments to be established

For borrowers who started with a higher rate or are actively improving their credit, waiting 6 to 12 months can sometimes lead to even better loan terms.

When Does It Make Sense To Refinance Your Car?

Deciding whether to refinance your auto loan isn’t just about getting a lower payment – it’s about understanding how refinancing fits into your bigger financial picture. In the right situation, refinancing can help you save money, pay off your loan faster, or free up room in your budget. In the wrong situation, it can cost you more over time.

Before moving forward, it’s important to weigh both the benefits and the potential drawbacks so you can make a confident, informed decision.

Benefits Of Refinancing

Refinancing your auto loan can be a smart financial move when it improves your overall loan terms – not just your monthly payment. The most successful refinances usually happen when one or more of the following apply:

Your Credit Score Has Improved

If your credit score is stronger now than when you originally financed your car, you may qualify for a lower interest rate. Even a modest drop in your rate can lead to meaningful savings over the life of your loan.

Your Current Interest Rate Is High

Many buyers accept higher rates at the dealership for convenience. Refinancing allows you to shop for better terms and potentially lower the total interest you’ll pay.

You Want A Lower Monthly Payment

Refinancing can help reduce your monthly payment by securing a lower rate or adjusting your loan term, freeing up cash in your monthly budget for other financial priorities.

You Want To Pay Off Your Loan Faster

Switching to a shorter term may increase your monthly payment slightly, but it can significantly reduce your total interest paid and help you own your car outright sooner.

Market Interest Rates Have Dropped

If current rates are at least 1% lower than when you financed your vehicle, refinancing could deliver noticeable long-term savings.

Cons Of Refinancing

In certain situations, moving forward with a refinance may not work in your favor and could end up costing you more in the long run. Here are a few instances when it may be better to wait:

You’re Almost Done Paying Off The Loan

If you have less than 12 months left, refinancing likely won’t save you enough to make it worth the effort. Most of what you owe at this point is principal, so interest savings would be minimal. In this case, you’re better off staying the course and enjoying the satisfaction of owning your car outright.

You Owe More Than The Car Is Worth

When you’re “upside down” on your loan, you owe more than your car’s resale value. Lenders see this as risky, which can make approval harder or lead to less favorable terms. Also, rolling negative equity into a new loan increases your balance and delays building real equity. This can leave you financially trapped if you want to sell or trade in the car later. Sometimes, the best move is to focus on paying down the balance before considering refinancing.

You’d Be Extending Your Loan Too Far

A longer loan term can lower monthly payments, which sounds great until you do the math. More months mean more interest paid, often wiping out any benefit of a lower rate, and can cause you to pay more for the car overall than if you had just kept your current loan.

For example:

If you owe $15,000 on your current auto loan with 36 months left at a 6% interest rate, your remaining schedule would look like this:

• Monthly payment: $456
• Total interest left to pay: $1,428

If you refinance that balance into a 60-month repayment period at a 4% interest rate, here’s what the new loan structure would look like:

• Monthly payment: $276
• Total interest over 60 months: $1,575

Refinancing only makes sense if it saves you money in the long run, not just month to month. It’s worth balancing short-term relief with long-term cost.

You’ve Had Recent Late Payments

Lenders want to see a track record of on-time payments before offering competitive refinancing terms. Late or missed payments can lower your credit score and lead to higher interest rates that cancel out any savings. In many cases, rebuilding your payment history for a few months is the better strategy.

Market Rates Have Risen

Refinancing works best when current rates are lower than the rate on your existing loan. If rates have increased since you financed your vehicle, refinancing could actually increase what you pay over time – even with a small change in percentage. A higher rate can add hundreds or even thousands of dollars in interest over the life of the loan. It may be better to wait for rates to drop by at least 1% before considering a refinance.

Does It Cost Money To Refinance A Car?

Auto loan refinancing may include a few costs, but how much you pay depends on the lender and the loan terms of the new loan. In Texas, here are the common fees you might come across:

• Lender fees. Some lenders charge fees to review your application, process documents, or set up the new loan. These may be listed as application, underwriting, documentation, or processing fees.
• Credit check fees. When a lender reviews your credit, the credit bureaus charge a fee for accessing your report. In some cases, lenders pass this cost on to the borrower. The fee is typically low, but it’s helpful to ask upfront so you know what to expect.
• Title transfer fees. Most lenders require that they be listed as the lienholder on your vehicle title. When the lienholder is updated from your previous lender to your new one, the State of Texas charges a nominal fee based on where you live.
• Registration fees. If your loan needs updated registration or title paperwork beyond the lienholder change, you may have additional fees assessed by the county or state.
• Gap insurance or warranties. You might need to renew or transfer coverage, which could add to costs.

Before moving forward, compare these potential fees to the amount you expect to save. If the costs outweigh your long-term interest savings, auto loan refinancing may not be the best option right now.

Does Refinancing A Car Hurt Your Credit?

Refinancing a car loan can cause a small, temporary dip in your credit score, but for most borrowers, the effect is minor and short-lived.

Here’s how refinancing might hurt your credit score:

• Hard inquiry. Applying for a new loan triggers a hard credit check. This is when the potential lender pulls your credit report to evaluate your creditworthiness for a new loan. It can lower your credit score by a few points, but the effect is usually minimal and short-term.
• New account. Refinancing pays off your original loan and closes that account, which can slightly reduce your average account age. Opening a new loan account may also have a small effect on your score. Overall, the impact is generally minor and temporary – especially if you continue making on-time payments.

What Credit Score Is Needed To Refinance A Car?

There’s no set minimum in Texas, but here’s a rough guide:

• 781+: You’re likely to get the best rates available.
• 661–780: Competitive terms are usually within reach.
• 601–660: Approval is possible, but expect higher interest rates.
• Below 600: Approval is tougher, and interest rates may cancel out any savings.

Bear in mind that lenders also weigh income, debt-to-income ratio, your car’s value, and your payment history. Even with a lower score, a solid income and steady job can improve your odds.

Refinance Your Car Loan At A+FCU

Refinancing can be a great way to free up cash or cut interest costs, but timing and your financial situation matter. Run the numbers, weigh the fees, and work with a reliable financial partner like A+ FCU.

To refinance your car loan, you’ll need to be an A+FCU member, but joining is quick and comes with access to a full range of financial tools and personalized support.

Ready to lock in your savings? Join A+FCU today and enjoy exclusive member benefits that help you achieve your financial goals.