When Should You Refinance Your Car Loan?

Refinancing your car loan means replacing your current loan with a new one, usually to get a lower rate, a better payment, or both.

It can save you money—but only in the right situations.

Use KOHO Everything to Get “Refinance Ready”

Even before you refinance, getting control of your everyday money helps you qualify for better terms and handle payments comfortably.

With KOHO Everything:

• Grow your savings with 3.5% interest, one of the highest rates in Canada

• Earn a 2% cash back rate on groceries, eating, drinking, and transportation and 0.5% cash back on everything else

• There are no foreign exchange fees, so you save on international purchases and travel

• Unlimited transactions and free e-transfers

• No minimum balance required, ever

Good Times to Refinance Your Car Loan

You might consider refinancing when:

• Your credit score has improved
  If your credit is better than when you first got the loan, you may qualify for a lower interest rate.

• Rates in general are lower than before
  When market rates drop, refinancing can reduce your interest cost over the life of the loan.

• You want a lower monthly payment
  Refinancing into a longer term can drop the payment, but you may pay more interest overall—good for cash flow, not always for total cost.

• You want to shorten your term
  If you can handle a higher payment, refinancing to a shorter term at a good rate can help you pay off the car faster and save on interest.

When Refinancing Might Not Be Worth It

Refinancing isn’t always the right move, such as when:

• Your car is almost paid off
  With only a small balance left, the savings from refinancing may be tiny.

• You’re “upside down” on the loan
  If you owe more than the car is worth, a refinance won’t fix that—it just reshuffles the debt.

• Fees wipe out your savings
  If there are admin fees, penalties, or extra costs, make sure the interest savings are still bigger than the fees.

• You’re just stretching the loan to feel cheaper
  A much longer loan can lower your payment but increase how much you pay in total.

How to Decide

Refinance if it helps you:

• Pay less interest overall

• Get a manageable payment without endlessly extending the term

• You understand all the fees and conditions.