How to Refinance a Car Loan
After paying your car loan for several months, you might be curious about the refinancing process. How do you refinance a car loan and what are the benefits of refinancing? In this guide, we walk you through the best way to refinance an auto loan in order to save money in Eatonton and Monticello. Learn all the steps, and then get started at our finance department in Milledgeville!
How Do You Refinance a Car Loan?
Learning how to refinance a car loan is similar to applying for financing in the first place. But this time, you’ll want to focus on lowering your interest rate. Here is a brief overview of the refinancing process:
- Find Your Current Terms: Before you can improve your interest rate and monthly payments, you’ll need to establish your current interest rate and monthly payments. You can either take a look at your documents if you have them on hand or you can contact your lender.
- Check Your Credit Score: After paying your bills on time for several months, you might find that your credit score has gone up. Check your credit score to get a better picture of your financial standing, so you know what to expect as you apply.
- Start Applying: Submit your applications to several automotive refinance companies within a 14 day period. This gives you a wider pool to choose from, while also minimizing any impact on your credit score.
- Evaluate Offers: Take a good look at each offer. Now is the time to be selective, so take your time and really go into the pros and cons of each. Use our payment calculator if you’d like help crunching the numbers.
- Decide Loan Term: Your loan term will determine how your payments are spread out. A longer loan term means smaller monthly payments and more interest paid, while a shorter loan term means larger monthly payments and less interest paid overall.
What to Know When Refinancing Your Car
We’ve gone over how to refinance a car loan, but there are a few other things to keep in mind before you start the process:
- Fees: Does your original contract mention any fees for paying off the loan early? Some do, and this can be costly. Be sure to run the numbers again to make sure that refinancing will still save you money.
- Underwater Finances: Do you owe much more than your vehicle’s currently worth? This is called being “underwater” on your loan, and it can affect your ability to get approved for financing.
- Older Vehicles: Is your car older? Sometimes lenders are hesitant to approve drivers with old models, since the vehicle has already gone through significant depreciation at that point.
Learn About Your Financing Options at Five Star Toyota of Milledgeville
What’s the best way to refinance an auto loan for your unique financial situation? Our team would love to extend a helping hand! Visit our finance center in Milledgeville or contact us online with your questions. You can even apply for financing from home.
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