If you’re stuck paying a high rate for your car loan, you may find yourself wondering if there’s a better way you could be managing that cost. Whether you are having a hard time making your monthly payments or you are simply trying to find the smartest way to save, exploring auto loan refinancing might help. If you’re struggling to understand what refinancing an auto loan means (and how it could work for you), check out the answers to these 5 frequently asked questions.
What is auto loan refinancing?
In short, refinancing an auto loan means you pay off your current loan with a refinancing loan from another lender. Many people don’t know that this is an option, or if they do, they don’t know how to refinance an auto loan. Fortunately, refinancing is possible in many circumstances, and can be a big help if you are looking to save money on your loan, both immediately and over time.
How do you refinance an auto loan?
One of the smartest things you can do is obtain refinancing offers from multiple lenders. This enables you to choose the refinancing option that best fits your needs, whether you are looking for an alternative to too-high finance charges, or want to reduce the amount you pay per month on your car loan. To get started, use myAutoloan.com to get up to 4 offers through a single application.
When should you consider refinancing an auto loan?
There are a number of situations that might make it worth refinancing your loan. If there has been a change in your credit score (whether up or down), you might want to rethink the way you’re managing your loan finances. If you’re having trouble meeting your monthly payments because of your financial situation, you may be able to lighten that load with refinancing.
How much can you save if you refinance an auto loan?
It depends on your situation (see above), but it can definitely be worth investigating. Savings can vary depending on the remaining balance on your loan, and what the difference would be between your current interest rate and the potential new one. Because some car loan lenders can have finance rates as high as 21%, some customers may find they are able to save thousands of dollars in the long run with the right loan refinancing. To get a better idea of your potential savings before you apply for an offer, use a car loan calculator to get an estimate.
Can your credit score affect your ability to refinance an auto loan?
It can, but fortunately for those with bad credit, it all depends on which lender you work with. Some lenders specialize in loans for those with less-than-perfect credit scores. For example, there are lenders that might let you reapply for a loan after you make six payments. When it comes to refinancing, though, it’s helpful to improve your credit no matter your circumstances. Start by learning more about credit scoring and use these tips to start improving your score.