Reasons to Refinance Your Car Loan Now: Strategies and Tips
If you are looking to get a better interest rate on your car loan, or want to be able to refinance without having a co-signer, then this blog post is for you! We will discuss the benefits of refinancing and how it can help you. We’ll also provide tips and strategies for getting started with auto loan refinancing.
When you refinance your car, you take on a new loan to pay off the balance on your current car loan. Maybe your credit has improved and you might qualify for a lower interest rate, or your financial situation has gotten better and you want to remove the co-signer from your original loan. Refinancing with a new loan could mean getting better terms and rates that are more in line with your current financial needs and long-term plans.
These are some benefits
- Save money and improve your credit
- Get a lower monthly payment
- Reduce the amount of interest you’ll pay on your existing car loan
- Create a stress-free budget by turning an expensive monthly payment into an affordable one.
- You can remove a co-signer from your car loan
There are many benefits to refinancing your auto loan. The main benefit is that you can save money in interest, typically by extending the term of your current loan. If you’re in good standing with your lender, then another perk will be a lower monthly payment or even an interest rate reduction. You also may have access to new features like cash-out refinancing, which might allow you to get out from under any negative equity in your car. But before going too far into the process, you should ask these questions:
- Is there a prepayment penalty?
- What fees will you be responsible for?
- Is your loan balance higher than the value of your vehicle?
- How old is it?
- Has credit improved since the origination date
If you’re wondering how much money could come out of refinancing, here’s an example using our online auto loan refinancing calculator
If you’re wondering how much money could come out of refinancing, here’s an example using our online auto loan refinancing calculator. Let’s say that a borrower has a car worth $16,000 and owes about $11,500 on their current auto loan (about 74% LTV). If they have no other debt besides this car payment and are looking to refinance for at least four years, the estimated monthly savings would be around $139 with an APR of just under 12%. The new term for this vehicle finance is 60 months instead of 48 months resulting in five additional payments. So it would take one hundred and fourteen more days or nearly three months longer than before to pay off the car.
How to refinance a car loan in a few steps
What are the steps to refinancing a car?
The first thing you need is proof of your income and employment status. You’ll also need information about how much money you owe on your current auto loan, along with documentation regarding:
- Your credit score
- Annual salary or wage amount
- The value of the vehicle(s) being financed
If all documents are in order, this should be enough for most lenders that specialize in loans like yours. Auto refinance companies usually have very strict guidelines when it comes to accepting applications based on financial eligibility criteria alone; however, they may allow borrowers who can’t meet typical requirements to apply if there’s a co-signer on an existing finance agreement as long as at least one of the borrowers is able to meet all requirements
We hope you’ve found this blog post helpful in answering any questions about auto refinance. If not, we encourage you to explore our website for more information on how refinancing can save you money or find other ways to lower your car payment. In case you prefer to change your vehicle let our team of experts guide you, we can help you trade-in your car for a higher amount and get you on a new car with the best financial terms possible. Good luck and he hope to hear from you!
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