Most car shoppers choose to buy their car through an auto loan. However, over the course of that loan, times can change and you may want to consider refinancing. So, what does that mean and how do you refinance your car? We’ll tell you.
Refinancing is essentially getting a new loan with different terms to replace your first. Unlike refinancing a mortgage, a refinanced auto loan may have little, if any, fees. Nevertheless, refinancing isn’t for everyone and you should only consider doing it under certain circumstances, like the following:
- A drop in interest rates. If your current interest rate is above 6%, you could potentially get a lower interest rate now.
- Improved credit. If you had a few negative items or no credit history when you first got your loan, you might now qualify for better terms after making several months of on-time payments.
- Financial difficulties. If your monthly payments have become difficult to manage, refinancing may be able to extend your loan term to lower those payments.
To refinance your car loan, all you need to do is apply for a new loan. This process should be faster and easier than your original loan and you could even do it online. Or, you could talk to your current loan provider and see what terms they could offer you.