If you're unhappy with your car loan, you may want to refinance. Refinancing your car loan is when you take out a new loan with new terms from a new lender. Then, you repay your existing car loan and make payments to the new lender. Is this the right move for you? Here are some benefits.

1. More time

When you refinance your car loan, you may be able to get more time to pay off your vehicle. Typically, when you buy a vehicle, you get five or six years to pay off the loan. If someone buys the same vehicle used, they will also get five or six years to pay off the loan. 

Through a refinance, you can claim some of that extra time. Here's an example: Imagine you bought a 2018 car in 2018. You made payments on the loan for three years until 2021. Then, you decided that you wanted more time to pay. So, you refinanced the remaining cost of the car into a new five-year loan. 

2. Lower payments

By spreading your loan over a longer time span in the above example, you reduced your monthly payments. Many people turn to auto loan refinances when they want to reduce their monthly payments. Contact a lender to talk about how a refinance would affect your monthly payments. 

3. Reduced interest rates

While there are some exceptions, generally people only refinance their car loans if they can get a lower interest rate. This also reduces your monthly payment if the loan amount and term are kept the same. 

There are typically two situations where you can reduce your interest rate. The first is when you have improved your credit score or improved other aspects of your credit profile such as your debt-to-credit ratio, your time at your job, or your income. 

The second situation is when interest rates go down in general. Monitor the news and look at the rates lenders are advertising. If they're lower than what you're paying, you may want to refinance. 

4. Cash

When you refinance, lenders base the value of the loan on the value of the vehicle, not necessarily on how much you owe right now. By extension, this means that you can get some of the value out of the vehicle. For example, if your vehicle is worth $20,000 but you only owe $5,000, you may be able to take out a loan for $15,000 and put $10,000 in your pocket. Note these are just sample numbers.