957
Refinancing your car loan can make sense, especially if you think you can get a better interest or if you want to extend (or shorten) the loan term. Here’s what you need to do to refinance your car loan.
- Collect your documents: When you apply for refinancing, you will need to submit certain documents to the lender. So, to make your life easier, it’s a good idea to gather these documents before you even start the process. Make sure to have your pay stubs and loan documents in hand.
- Check your credit score: If you’ve diligently made your payments for the last few years, there’s a good chance that your credit score may have gone up, which means you can benefit from the refinance.
- Send in your applications: It’s a good idea to apply to multiple refinance companies, so you can compare the loan offers you receive and pick the best one. It’s best that you submit all your applications within a 14-day window since all credit inquiries made by lenders will be grouped together, thus reducing the impact on your credit score.
- Evaluate the loan offers: Once you receive the loan offers, review the interest rate and terms and conditions of different loans, and pick the most suitable one. Now is also a good time to change the loan tenure. If you want to repay the loan quickly, opt for a shorter loan term. However, if your budget is a little stretched at the moment and you want to make smaller monthly payments, opt for a longer loan term. Keep in mind that if you do the latter, it’s likely that you’ll end up paying more interest over the course of the loan term
- Complete the process: To close the refinance process, you should complete the paperwork. In case the lender has any requests or queries, make sure to respond quickly.
It’s important to read through the fine print and be aware of all the possible charges and penalties. Make sure to only sign the paperwork once you are sure everything is as it should be.