Top 10 things to consider when refinancing your car loan
1. Check your credit score and report
The first step is to check your credit score and report. This will give you an idea of what interest rates you may qualify for. If your credit score has improved since you took out your original loan, you may be able to get a lower interest rate.
2. Know your current loan terms
Before you refinance, it’s important to know the terms of your current loan. This includes the interest rate, monthly payment, and remaining loan term. Your car’s value may have also changed, which could impact your loan-to-value ratio and the amount of equity you have in your car.
3. Compare rates and terms from multiple lenders
When you’re ready to compare rates, terms, and offers from multiple lenders, make sure to use a loan calculator to estimate your monthly payments. It’s a good idea to shop around online using a comparison website. Make sure you read the fine print and understand the fees and charges involved with each loan so you can make an informed decision.
4. Consider the length of the loan
The length of the loan is important to consider because it will affect your monthly payment. A shorter loan term will have a higher monthly payment, but you’ll pay less in interest over the life of the loan. A longer loan term will have a lower monthly payment, but you’ll pay more in interest over the life of the loan.
5. Consider your goals
Before you refinance your car loan, it’s important to consider your goals. Are you looking to save money on your monthly payment? Pay off your loan faster? Or get a lower interest rate? Then, make sure you factor these goals in when you’re deciding between your loan options.
6. Get pre-approved for a loan
Once you’ve compared rates and terms from multiple lenders, it’s time to get pre-approved for a loan. This process is easy and can be done online in just a few minutes.
7. Choose the right lender
When you’re ready to choose a lender, it’s important to compare offers and find the one that’s right for you. Make sure to read the fine print and understand all the terms and conditions before you sign.
8. Gather your documents
Once you’ve found the right lender, it’s time to gather your documents. This includes things like your driver’s license, income statements, and proof of insurance.
9. Submit your application
The next step is to submit your loan application. This can be done online, by phone, or in person.
10. Get funding
The final step is to get funding for your loan. Once your loan is approved, the lender will send your previous lender the loan amount. You’ll then start making regular loan repayments to your new lender.