Not everyone gets an excellent rate when taking out an initial car loan. If you’re in this situation, refinancing your loan can sometimes improve your interest rate. The basic idea is that the existing loan is replaced with a new one. It can have a different interest rate, length, or both.
Refinancing a car loan is similar to applying for one, but there are additional steps. It’s important to choose the right refinancing option to save money. We’ll be sharing how that works below.
Take the Initial Steps
Before you move forward with refinancing, make sure it’s the right move for you on a financial basis. If it is, you should review your current loan and be aware of all the particulars. This ensures you refinance and get better terms. You’ll also want to check your credit score before you get started.
Once you’ve done all those things, estimate your car’s value. Edmunds or Kelley Blue Book are great resources for this.
Shop for the Best Rates
Every lender is going to weigh eligibility, financial history, and credit scores differently. This makes it a good idea to refinance by shopping around. You can check the bank you use for other purposes but don’t make this your only stop.
Consider visiting a website that gives you several refinancing options. Compare the rates between different lenders to ensure you get the best deal as you move forward. Once you have a few preapproval offers, it’s easier to determine which is best for your financial goals.
Look at Savings
After you have a few rates, calculate what you would save by refinancing your auto loan. There are calculators online that can handle this process for you. You’ll also want to see if there are fees for the existing loan. Prepayment penalties are fairly common and add to the costs of refinancing.
Once you decide to move forward, you’ll want to get all your paperwork ready before you sign on the dotted line. Proof of income, insurance, and residency will be needed. You’ll also need details about your vehicle and existing loan.
Is It Time to Refinance Your Car Loan?
If you want to refinance your car loan and need a great provider, make sure to check out Finley Fi Solutions. We offer quick and simple refinancing with customized loan options and excellent customer support. If you’re ready to move forward with refinancing, reach out to us to find out what your options are.