Five Tips for Refinancing Your Auto Loan

Five Tips for Refinancing Your Auto Loan

Posted on Monday, September 11, 2017

Refinancing your loan is worth considering.

Should you refinance your auto loan? As auto loans get longer and longer terms, and as the credit and job prospects of Americans improve, you may be wondering if you can get a better deal on refinancing your car. The answer is… maybe. Here is what you need to know about refinancing and how to do it right.

Should You Refinance?

You should definitely at least check to see if things have changed for you, financially. Over the course of even a few years, your credit scores and overall financial health can shift dramatically, and that can have a surprising impact on your car loan. You may not be able to find a better deal, but it is worth seeing if there is one out there.

Check Your Credit

You are entitled to a free credit report every year, and if you are considering a major financial decision like refinancing your car, it is worth grabbing that report and seeing where you stand with your credit score and your overall accounts. This is especially true if you have had some setbacks from which you have since recovered; your credit can be repaired, but you do need to know the exact extent to which it can be. If you have a credit score below 600, though, you will probably be better off sticking with your current loan.

Gather Your Information

You will need to have a lot of information handy, not just information about you, but your car. Have a copy of your loan agreement handy, as you will need to give your name exactly as it appears on those documents. You will also need your car’s VIN, year, model, and any relevant history about your car, like accidents that have been repaired. You may be asked a lot of questions about your finances and your car by lenders, so it is best to be prepared.

Can you get a better deal?

Get As Many Quotes As Possible

With refinancing your car, it is really a simple question: Can you get a better interest rate and possibly a better term than the one you currently have? Even a few percentage points off your interest rate can save you quite a bit of money over the term of your loan, and a shorter term will mean less interest paid over time. However, that may not be possible, depending on your car, your credit, and your budget. So get quotes first and figure out if refinancing is worth it to you. You may be better off simply paying off your current loan.

Check Vendors Thoroughly

Just like any financial industry, there are lenders who simply want to offer you a better deal, and then there are sharks. Fortunately, researching lenders is easier than ever. Look up what people have to say about each vendor you are considering, see if they have had any problems with the government, and most importantly, ask your friends and family who they have worked with and what they thought of them.

If you find a good deal from a lender you trust, then definitely consider refinancing your car. Remember that the interest on your loan is the price you pay, and you always want a lower price. Not sure where to start, whether you are refinancing your car or buying one for the first time? Start with the research from CarFoundMe.