Refinancing Your Car Loan

Refinancing your car loan is a way to get a better interest rate on your loan. You trade off your old loan for a new loan at a better rate. It is always wise to reduce your interest rate but not extend the payment schedule, if the current market interest drops then you can refinance and save money. The goal is to save at least 2% and substantially decrease your monthly interest rate.

A requirement needed for refinancing your car loan is that the car value cannot be less than the amount of the loan. It is wise to try to reduce the amount you owe before refinancing. However your balance owed must be at least 7,500.

 Your vehicle must be under 5 years old for you to be able to refinance your car loan. Anything older will not have enough value in the lenders eyes. An exception to this rule would be a collector item like an antique car.

How to refinance your car loan?

• Use the exact same name with the exact spelling as the names on your current loan and have your account number ready
• Make sure all the vehicle information is accurate
• Contact your current lender and find out how much you still owe, your payoff balance
• Complete the application with the new lender, this can be done online if you want
• Include detailed information about your vehicle and how much you still owe on your present loan
• Approval decisions online are usually instant

How to select a lender for refinancing your car loan

• It must be a different lender from your present loan
• Comparison shop for best rates and deal. Take your time, it will be well worth spending a little more effort and will pay off handsomely
• Get online quotes from at least 3-4 lenders

Try to refinance your car loan early as the most interest is paid within the first few months of payment. You will save more money if you do this within the first 2 months of your loan, than if you wait a couple of years.

Refinancing your car loan is all about timing and when you do this early on in your payment schedule you can save a lot of money. Keep an eye on the market interest rate so that you can refinance at the right time. With a little planning you can save big bucks and you may even manage to save enough to pay off some other loans.

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