How to Refinance a Car Loan

If you’ve been paying off your auto loan for a couple of years now, you may be thinking about refinancing your loan in the hopes of getting a lower interest rate. Before you start applying to refinance in Lake Havasu City, you should be sure it’s the right choice for your financial situation, though. In the guide below, Anderson Auto Group explains how to refinance a car loan and what to know when refinancing your car. Our finance specialists are here to help you make an informed decision. 

How Do You Refinance a Car Loan?

What’s the best way to refinance an auto loan? For starters, you should have a better credit score now than you did when you first got accepted for the loan. With a better credit score, your chances of lowering your interest rate are much better, which is the whole point of refinancing. Confirm your current interest rate on your loan documents or by contacting your lender, then move onto the next steps:

• Check Your Credit Score: Confirm that your credit score has improved. If you’ve been making your auto loan payments on time and in full each month, your score has very likely increased over time!
• Apply for Refinancing: Just like when you originally applied for your loan, you should apply with a handful of auto refinance companies so you can compare rates and select the best one. Don’t forget: applications should be submitted in a 14-day period to limit the effect on your credit score. 
• Compare Offers: Refinancing is only worth the effort if you’re going to get a better monthly payment in the end. Estimate the new monthly payment you would get from each offer using our payment calculator. 
• Choose a Long-Term or Short-Term Loan: Remember that a short-term loan will have higher monthly payments but less interest paid overall, while a long-term loan will have lower monthly payments with more interest paid overall. 

At the end of the day, the best way to refinance an auto loan is unique to your circumstances. Take the time to compare offers and choose the refinancing company that best caters to your budget and your financial goal.

What to Know When Refinancing Your Car

Often, Bullhead City car owners jump straight to “how do you refinance a car loan?” without taking a moment to consider whether refinancing is a good option for them. Here’s what you need to know when refinancing your car:

• Potential Fees: Some loans include prepayment penalties, meaning you could be charged a fee for refinancing to pay it off earlier than intended. Check whether your original loan has prepayment penalties and what those penalties are. If the fee would be a greater amount than the money you’d save by refinancing, you’d probably want to reconsider. 
• Negative Equity: Do you owe more on your loan than your vehicle is currently worth? This is called negative equity or “underwater finance,” and it can make it more difficult to get approved for refinancing.
• Vehicle Age: Some lenders will not refinance an auto loan if the vehicle is older and already experienced the bulk of its depreciation. 

Explore Financing Options at Anderson Auto Group

Anderson Auto Group is here to give Kingman drivers like you financing advice they can trust. With any additional questions or to talk about the best way to refinance your auto loan, contact us and we will be happy to assist!