How to Refinance a Car
Every car owner should know how to refinance a car. For a lower car payment, refinancing a car loan is the way to make it happen. If you owned your car for at least two or three years, maintained a good debt to income ratio and improved your credit since you bought it, your chances of refinancing a car loan are better than you might think.
- Review your credit status. One of the main reasons people refinance a car loan is to lower their interest. Before you begin to refinance, get a copy of your credit report to see where you stand credit-wise. If your credit score has gone down since you bought your car, postpone refinancing until your scores are better.
- Gather up your loan documents. Once you have determined that your credit is good enough to refinance a car loan, get all of your loan papers, insurance documentation and any other pertinent documents and verify that the information on them is accurate. You don’t want the refinancing process to come to a halt because names and numbers don’t match up.
- Determine the exact amount to be refinanced. Contact your current lender and ask for the payoff amount on your car. Take into consideration the total loan amount that will be paid once the last payment is made, rather than just the monthly payments. There are fees involved when you refinance a car. In some cases these fees can add up and result in you paying more than you’re already paying with the current car loan.
- Shop around. You can browse online for refinancing quotes from different lenders. Consider using local lenders as well, who might be willing to go the extra mile just to get your business and customer referrals. An important rule to remember when you decide to refinance your car is to proceed slowly. Hasty decisions now lead to costly regrets later.
Some people refinance a car with the desire to pay it off sooner rather than later. Lowering monthly payments can extend the length of a car loan by a year or two, while raising monthly payments can result in an earlier payoff. It’s up to you to know which option is best for you.