Need to know how to refinance a car loan? Doing so can help you secure a lower monthly payment and a lower interest rate, leading to long-term savings on your vehicle! Rocky’s Auto Credit discusses the best way to refinance an auto loan below, as well as some additional information that can help you determine whether refinancing is the right choice for your right now.
How Do You Refinance a Car Loan?
Whether you’re from Phoenix or Glendale, if you’re wondering how to refinance a car loan, you have one common goal: lowering the interest rate you’re charged each month. What’s the best way to refinance an auto loan? To start, you need to know exactly how much you’re currently paying. You should find this information readily available in your loan documents, or you can contact your lender to confirm your present interest rate and monthly payment amount. Then, follow up with these steps:
Know Your Current Credit Score: To refinance your loan, you’ll most likely need to have a better credit score than you had when you initially applied for it. So long as you’ve made timely payments thus far, your score has likely increased!
Begin the Application Process: For the best chance of success, you should apply with a handful of automotive refinance companies. Just be sure to minimize your applications to a 14-day period so your credit score isn’t impacted when lenders check it.
Compare Offers: Once you start receiving offers, set some time aside to work out the math and compare the monthly payments each offer would get you.
Set a Loan Term: You can opt for a short-term loan with higher monthly payments and lower interest, or a long-term loan with smaller monthly payments and higher interest.
What to Know When Refinancing Your Car
What do you need to know when refinancing your car? Here are some factors you should consider to determine whether refinancing is the best option for you at this time:
Potential Fees: Some loans have prepayment penalties that could cause you to incur a fee if you refinance. If that fee would be greater than the amount you would save by refinancing, then you probably want to reconsider.
Negative Equity: When you owe more on your loan than what your car is worth, it’s considered negative equity or “underwater finances.” In this case, you’ll likely have a difficult time getting refinanced.
Vehicle Age: If your car has undergone a significant amount of depreciation, many lenders won’t consider it for refinancing.
Explore More Financing Solutions at Rocky’s Auto Credit
Does refinancing sound like a viable option for you? If so, you can apply for pre-approval at Rocky’s Auto Credit! Or, if you’ve determined that refinancing may not be the best solution, you can contact us to talk with our finance professionals about other options. We’re here to help every driver from Phoenix to Tempe find the solution that works!
