How To Refinance A BMO Car Loan

How To Refinance A BMO Car Loan

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated September 16, 2022

It’s tough to get by without a car these days, but it can be just as difficult to keep up with your car loan payments. Luckily, refinancing your car loan can help reduce your car loan payments and make your loan more affordable.

If you currently carry a car loan with BMO, refinancing may be available to you. Through a refinance, you can extend your loan term and/or reduce the interest rate to lower your monthly payments so they better fit your budget. 

Read on to find out more about how to refinance your BMO car loan. 

Can I Refinance My Car Loan With BMO?

Yes, you may be able to refinance your BMO auto loan, depending on your situation. With a car loan refinance, the lender issues you a new car loan to pay down your outstanding debt. Your new loan will come with a different rate and loan terms, making it more affordable for you. 

Refinancing makes the most sense if your credit or financial situation has improved since you first applied for your car loan, or if a lot of time has passed since you purchased your vehicle.

Contact Information For The BMO Auto Financing Department

To speak to a representative in the BMO financing department, you have a few ways to get in touch:

  • Sign in to BMO Online Banking and choose ‘my messages’
  • Email at retail.auto@bmo.com
  • Call 1-877-225-5266
  • Visit in-person and use the branch locator to find a location nearest you 

BMO Portal Login 

To access your BMO portal, you’ll need to have a BMO chequing account already set up. Once your account is ready to go, you can log in to your account by entering your 16-digit card number and password.

How To Check Your BMO Car Loan Balance

To check your car loan balance, you simply need to log into your online BMO account. To access your online BMO account, you’ll need to open a chequing account with BMO and register for online banking. Here you’ll find information regarding your remaining car loan balance. 

Otherwise, you can speak with a representative by calling 1-866-727-0992 to find out how much is still outstanding on your car loan.

How To Lower Your Interest Rate On A BMO Car Loan

The interest rate you’re charged on your BMO car loan will depend on a few key factors, including the following:

  • Your credit score
  • Your loan amount
  • Your loan term length

If you’re looking to lower your car loan interest rate, your best bet is to take steps to improve your credit score. With stronger credit, you’re considered less of a risk to the lender, and may therefore qualify for a lower rate as a result. 

If some time has elapsed since you first took out your BMO car loan and your credit has improved significantly, you may want to consider refinancing your car loan to reduce your interest rate. This can save you plenty of money over the life of the loan and reduce your monthly payments. 

How To Lower Monthly Payments For A BMO Car Loan

If you want to reduce the monthly payments on your auto loan, there are a few options to consider:

Talk To A BMO Representative

If you’ve typically kept a good record of timely payments but are recently finding it difficult to cover your monthly car payments, BMO might be open to finding a solution for you. This could involve deferring your payments temporarily or lowering your payments for a month or two while you sort out your financial troubles. Either way, you may want to first speak with a BMO car loan representative before taking any further action.   

Refinance

As mentioned, refinancing your BMO car loan is an effective way to lower your monthly payments, especially if you reduce the interest rate or extend the loan term to give you more time to pay off what you still owe. Just keep in mind that a longer loan term will likely mean more interest paid overall.

Trade-In Or Sell Your Car For A Cheaper One

If your financial troubles are more long-term in nature, consider selling your car or trading it in for a more affordable one. If you sell privately, you may be able to get more for your vehicle. Otherwise, trading it in with your dealer might mean you’ll get a little less for it, but it’s a more hassle-free way to get your car off your hands before buying a cheaper one.

Lease Your Car

Lease car payments are almost always lower than financing payments because you’re only paying for the car’s depreciation throughout the lease term, in addition to interest charges, taxes, and fees. Plus, you’ll have the benefit of being able to easily trade it in at any time.

BMO Car Loan Payment Extension

A loan payment extension gives you a little more time to come up with the funds to cover your payment obligations. Depending on your situation, the lender may agree to extend the maturity date on your car loan. If you’ve already missed a payment or two, a loan extension can restructure your payment schedule to help you get back on track.

BMO Car Loan Payment Deferrals

A loan payment deferral lets you postpone your monthly payments for a certain amount of time. Generally speaking, you may be able to defer your payments for one or two months per year, which will need to be paid back at a later date. 

This solution might make sense if you’re going through some financial hardship that is expected to resolve within the next few months. Otherwise, loan payment deferrals may not be suitable for more long-term financial issues.

What Is BMO’s Grace Period For Car Loans?

BMO allows a grace period if you repay your balance in full by the due date. You have 21 days to make good on your payment. There is no interest charged during that grace period, so you won’t end up paying any more than you normally would have if you had made your payment on time. However, this grace period is not meant to be abused and may only be applicable a handful of times. If you’re experiencing financial difficulties and might default on your payment, reach out to a BMO representative to assess your options.

What Happens When You Miss A BMO Car Loan Payment?

Missing a car loan payment can result in consequences, though the seriousness of those repercussions depends on how late your payment is:

Less Than 30 Days Late 

If your car payment is less than 30 days late, someone from BMO will likely reach out to you to find out why. You could be charged a late payment penalty fee, though you may have the chance to make up for that late payment within a certain grace period and avoid penalties.  

It should be noted that whether or not your BMO car loan payment is considered late depends on the terms of your loan contract. 

More Than 30 Days Late 

If your car payment is more than 30 days late, the repercussions will be more severe. Depending on how overdue your payment is, the following scenarios may occur:

Your Credit Score Could Take a Hit 

Car loan payments that are more than 30 days past due are usually reported to the credit bureaus. If this happens, your credit report will reflect the missed payment, which will have a negative effect on your credit score. 

Your Car May Be Repossessed

Car loans are usually secured, which means they require an asset of value to collateralize the loan. In the case of a car loan, it’s your vehicle that serves as collateral.

If you miss payments that are long overdue, you could risk losing your car through repossession. The lender may want to repossess the car and sell it to recoup their losses. 

BMO’s Car Loan Repossession Policy

Generally speaking, most lenders won’t initiate the repossession process until you’re 90 days overdue on a car payment. Your loan contract will provide details regarding the number of days your payment needs to be late before your loan is considered in default.

How To Voluntarily Surrender A BMO Financed Car

Usually, it’s the lender that chooses to repossess a vehicle when loan payments are late by at least 30 to 90 days. But in some cases, the borrower may choose to voluntarily surrender their vehicle

When you take out an auto loan to finance a car purchase, you technically don’t yet own the vehicle. Instead, the lender places a lien on the car until you have fully paid off the loan. During this time, the lender may take back the car to recoup their losses.

But you may choose to bring the vehicle back to the lender without them having to come and take it from you, which is known as ‘voluntary repossession’. In this case, you would let the lender know about your troubles keeping up with your loan payments, then come up with a plan to deliver the vehicle back to them.

BMO Car Refinance FAQs

Does pre-qualifying for auto refinancing hurt my credit score?

No, pre-qualifying for auto refinancing will not have a negative effect on your credit score, and neither does pre-approval. Lenders can pre-qualify and pre-approve you by conducting a “soft inquiry” of your credit report, which doesn’t impact credit.

Can I refinance a BMO car loan with bad credit?

BMO generally requires good credit to get approved for a car loan. That said, the bank may be willing to work with you if you have less-than-perfect credit, as long as other facets of your financial life are healthy. For example, a strong income, high down payment, and ample assets may help compensate for your lack of good credit. However, these factors depend on your lender as well, so you’ll likely have to apply and see how successful you can be with BMO despite a poor credit score.  In a worst-case scenario, you may choose to add a co-signer to your BMO auto loan to boost your chances of getting approved.

How long does an auto refinancing pre-approval last?

Pre-qualification typically lasts between 60 to 90 days.

Does BMO report to the credit bureaus?

Yes, your BMO car loan payment history is reported to the credit bureaus in Canada. Your credit score may be impacted as a result. If you make timely payments, your credit score may improve, but a history of late payments will likely diminish your score.

Can I trade in a financed vehicle with BMO?

Yes, you can trade in your car even if you still carry an outstanding balance on your car loan. If you’re still financing the vehicle, the dealer will assess the value of your trade-in and subtract the amount you still owe. This amount will then be subtracted from the price of your new vehicle.

Final Thoughts

If you’re finding it difficult to keep up with your BMO car payments, find out if refinancing is an option for you. If your credit score has improved since you first took out your loan or it’s been a while since you bought the car, it might make sense to refinance. Keep in mind though, that refinancing often comes with a certain cost. Be sure to crunch the numbers first to find out how much you’ll actually save. 

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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