Thinking Of Refinancing Your Auto Loan? Here’s How

Refinancing your auto loan can help you save on interest and repay the loan quickly. If your current lender is unwilling to reduce the interest rate, you should consider refinancing. When you refinance an auto loan, you essentially replace the current loan with a new loan from a different lender. The new lender pays off your current loan, after which you’ll need to start making payments to the new lender.

When You Should Consider Refinancing

• Interest rates have dropped: If the interest rates have dropped recently, it’s a good idea to refinance your loan. Doing this can help you save money on interest payments.
• You are overburdened by the payments: While most people refinance their car loans to get a better interest rate and repay their loans quickly, you can also consider refinancing if your current loan payments are too large or if there has been a change in your financial situation. The new loan can be taken for a longer-term, thus, reducing the monthly payment.
• You currently pay a high interest: If you didn’t compare your loan options before buying a car, you may have opted for a loan with an extremely high-interest rate. In such a case, it’s best to refinance to a lower interest rate loan.

How To Refinance An Auto Loan

1. Check your credit score: Before you start looking for a new loan, make sure to check your credit score. If you’ve made your car loan payments on time for at least a year, there’s a good chance your credit score has improved.
2. Compare your options: Next, you’ll want to compare the various loans available. It’s a good idea to apply for pre-qualification to multiple refinance lenders at once so you can compare the terms and interest rates of different loans. If pre-qualification isn’t an option, make sure to at least reach out to different lenders to know what their requirements are.
3. Run the numbers: Once you know what the new interest rate and loan term are likely to be, it’s a good idea to run the numbers to check if it actually makes sense to go through with the refinance process.
4. Apply for refinancing: If you find that you will either be able to save money on interest or stretch the loan term to make payments more affordable, you’ll need to complete the refinance application with the new lender.

Typically, the entire process can be completed in a few days!