Can I Skip a Payment When I Refinance My Car Loan?
If your car payment takes up a significant portion of your monthly income, it can often lead to cashflow issues. Whether your monthly budget is stretched to the max or you’re forced to dip into savings each month, a hefty car payment is less than ideal. Fortunately, there is a solution that can help you alleviate these cashflow issues. By refinancing your car loan, you can lower your payment and infuse extra money into your monthly budget.
While lower monthly payments is one of the most commonly known benefits associated with car loan refinance, there is another lesser known benefit that can provide you with a significant short-term infusion of cash into your budget. In many instances, you’ll be able to skip one to two payments when you refinance your car loan.
Why Can I Skip a Payment When I Refinance my Auto Loan?
Skipping a payment or two without penalty seems like a perk that is just too good to be true. While most “too good to be true” scenarios are often associated with some catch or undisclosed downside, the ability to skip a payment when you refinance your car loan actually is as good of a benefit as it sounds like – and there is no catch or undisclosed downside.
The reason why you’re able to skip a payment or two relates to the process associated with refinancing your car loan. When you refinance, you’re taking out a new loan, ideally with much better terms, that will be used to pay off your existing car loan. The new loan will then replace the old one and moving forward, you’ll make your payments to the new lender under the new terms established in your refinance agreement.
The process of paying off your existing loan and opening your new loan takes time to complete. In most cases, it will take about 30-45 days for the old loan to be closed out and your new loan to be up and running. During this time period, you’ll experience a gap where you don’t owe any payments to your old lender, and your new lender isn’t ready to begin processing payments on the new loan. Therefore, you’ll have a break from your monthly payments during this gap.
Depending on where you are in your monthly loan cycle, this can either equate to a one-month break or a two-month break in payments.
Is There a Downside to Skipping a Monthly Payment When I Refinance My Car Loan?
Why Can I Skip a Payment When I Refinance my Car Loan?
No. The money associated with the payments being skipped are included in your new loan and will be paid at a later date. Since this money is built into your new loan, there are no missed payment penalties, and you’re not accruing additional interest by skipping a payment. This is just a function of your new loan needing time to process before payments are required.
While there’s no downside to skipping a payment, this short-term financial windfall can be extremely advantageous to you. If you’re experiencing cashflow problems right now, having a month or two without a car loan payment can provide significant benefits:
- You can add this money to savings to give yourself some breathing room in your budget in future months
- You can use the money you’d normally put towards your car loan to pay down other high interest debts
- You can use this money for a purchase you’ve needed to make, but couldn’t afford
- You can take that long overdue vacation that you previously couldn’t afford
- You can make improvements to your home
The options are virtually limitless. It’s easy to see how adding hundreds of dollars to your budget for one to two months can pay huge dividends.
iLending Makes Car Loan Refinance Easy and Hassle Free
When you refinance with iLending, you benefit from our exclusive You First Approach™ which makes refinancing a car loan easy and hassle free. As part of this process, you’ll work closely with one of our loan consultants who will discuss your refinancing goals in detail. If skipping a payment or two is very important to you, make sure to express this during your conversation with your loan consultant.
Using this information, your loan consultant will do the work of comparing loan options to identify the best ones that meet your goals. With a network of over 50 nationwide lenders, we have access to some of the best refinance solutions available. Your loan consultant will present you with the options that most closely align with your goals, answer your questions and help you determine the right choice for your specific situation.
Once you’ve decided on the best loan option, your loan consultant will continue doing the work for you. We’ll help you fill out the paperwork, and we’ll even follow up with your existing lender to ensure your old loan is paid off. You’ll have peace of mind that everything is handled correctly, and you can simply sit back and enjoy the benefits of a better car loan.
On average, customers save $145/month when they refinance a car loan with iLending. This monthly savings, along with the additional cash you save from skipping a payment or two, can have a significant impact on your monthly budget, helping you to more easily afford your life.
Apply now to get the car loan refinance process started.
What would you do with an extra $132* in your pocket?
