How to Refinance a Car Loan
If you find it challenging to make your car payments each month or if you were given a high interest rate on your Escondido auto loan and would like to save money, now is the perfect time to learn how to refinance a car loan.
You may be asking, “How do you refinance a car loan?” When you refinance, it’s possible to acquire a new loan for your car with a lower interest rate. With the lower interest rate comes the additional benefit of lower payments. If you keep the length of the loan the same, you could save thousands of dollars throughout the loan. Depending on the time you refinance, you could extend the term to make even lower monthly payments.
To determine whether you would save any money by refinancing, use a payment calculator to get an estimation of your monthly cost. But before you proceed, there are a few things to highlight on what to know when refinancing your car. Discover the best way to refinance auto loans below.
What to Know About Refinancing Your Car Loan
Refinancing your car loan is swapping your current auto loan for a new one. Because your new loan will pay off the previous one, you will enter into an entirely new loan agreement. There are many reasons why someone may want to refinance their auto loan, but most drivers typically do it to save money.
When you refinance your loan, you may incur additional fees. Also, because the lender will conduct a hard inquiry into your ability to pay, your credit score may suffer minor damage.
Even if your current loan payments don’t adversely affect you financially, you may consider refinancing if your credit score has improved since you initially entered into your loan agreement. For example, if your credit score was 675 at the time you acquired your loan, you may want to investigate refinancing if your score is now 725. The better your credit score, the lower your interest rate.
Another option to consider is getting in-house used car financing. Financing your auto loan at the dealership has a few benefits:
- The processing time is faster
- You may be entitled to additional benefits including extended warranties
- Qualifying for the loan tends to be easier
- You can build your credit
Getting a Car Loan with Bad Credit
Many people have credit that’s not perfect. Fortunately, all hope is not lost. Many lenders offer bad credit auto loans. To counter the effects of a lower credit score, try to save money for a larger down payment. The more money you put down, the less you will have to pay when your loan is approved.
If you have bad credit and don’t have the option of saving money, consider finding someone with better credit who will co-sign the loan with you. Keep in mind they will be financially responsible if you are unable to make payments.
If you can’t save money and can’t get someone to co-sign, be prepared to pay an elevated monthly payment with a higher interest rate. And if that doesn’t sound appealing, consider waiting until you can raise your credit score.
Refinance Your Car Loan near Chula Vista at Today
Refinancing your car loan may help you save money down the road due to a lower interest rate and lower monthly payments. If you are considering refinancing, contact us so we can discuss the options that are best for you. Cruise through San Diego with a better value when you work with our team today!