Should I refinance my car loan, and when does it make sense?

Refinancing an auto loan replaces it with a new loan, ideally at a lower rate, and it can make sense if your credit score has improved since purchase, if rates have dropped, or if you were sold a high dealer-markup rate. Run the numbers: a lower APR on the same or shorter term saves real money, but extending the term to lower the payment can leave you underwater and paying more interest overall. Watch for prepayment penalties on the old loan and any fees on the new one, and don't refinance if you are close to paying the car off, since most interest is front-loaded. Credit unions often offer the most competitive auto-refinance rates, so shop a few before deciding.