When you initially finance your car you might not qualify for the best rate. But that doesn’t mean you have to live with a less-than-great car loan. Refinancing your car loan is a great way to get a better car loan APR and better car loan terms. So what’s the best way to refinance, and how can you get started?
Refinancing your car loan is a great way to get a better car loan, and using a company that specializes in car loan refinance is the best way to do it.
What does it mean to refinance a car loan?
Refinancing a car loan is when you replace your existing loan with a new car loan. Your new loan may have a better car loan APR, better repayment terms, and even have a cosigner (or have a cosigner removed).
If you are asking yourself “why should I refinance my car loan?”, you can decide if refinancing your car loan is good move by asking yourself the following:
- Is it possible I can find a lower car loan APR?
- Am I struggling to make my monthly car payment?
A lower interest rate
If the answer is yes to either of those questions, refinancing your car loan may be a great option. You can find a lower car loan APR if any of the following apply to you:
- Your credit score has improved since your initial financing.
- The market rate has decreased since your initial financing.
- Your debt to income ratio has improved since your initial financing.
Refinancing is very beneficial when you find a lower car loan APR. When you reduce your rate, you will reduce your monthly payments and save a lot of money over the life of your loan.
A different repayment plan
If you are having a hard time making your monthly car payments, refinancing can help you change your repayment plan, which can change your monthly payments greatly. Lengthening your repayment period allows you to repay your principal over a longer period of time, making each payment smaller. Note that you will pay more in interest (since you will be paying interest for a longer period of time), but it can be a worthwhile tradeoff if you are having trouble making ends meet every month.
Where is it best to refinance your car?
There are many places that will refinance your car loan. Traditional banks, credit unions, and online lenders are all great options. You can also refinance your car loan through a dealership, but this is typically the most expensive option.
The best way to refinance your car loan is to use a company that specializes in car loan refinance, like Auto Approve. Auto Approve has relationships with banks, credit unions, and lenders across the country, which means they can help you shop around and compare your options quickly and easily. If you choose to refinance your loan on your own, you will need to do a lot of research to determine where you should apply. Then, you will need to apply and compare the different terms and rates that are offered to you. But when you use Auto Approve, this process couldn’t be easier. Auto Approve will handle all of that for you, so all you have to do is sign on the dotted line.
When you find the vehicle refinance loan that is right for you, Auto Approve can make sure that your old loan gets paid off and that all of your paperwork is done correctly. Auto Approve will even handle the pesky DMV paperwork for you.
How to Refinance a Car Loan
If car loan refinance sounds like a good option for you, it’s easy to get started.
Make sure you qualify.
There aren’t a lot of qualifications when it comes to refinancing, but eligibility may depend on:
- How old your car is
- How many miles your car has on it
- How much money is left on your existing loan
If you aren’t sure if you qualify for refinancing, Auto Approve can help! Our agents can help you determine if you are eligible for refinancing (and can help you figure out how much money you could be saving!)
Prepare your finances.
A little preparation can go a long way when it comes to refinancing. Car loan refinancing is most beneficial when your credit score and your finances are in tip top shape. Take the following steps to ensure that your score is at its best:
- Commit to making full, on time payments.
- Request a copy of your credit report and review it for any errors.
- Request higher credit limits.
- Avoid applying for any other lines of credit while you are in the process of refinancing
If you are having trouble with your monthly payments, go through your monthly budget to determine what you can afford to pay. Experts recommend that your monthly transportation expenses (this includes car payments, gas, parking, maintenance, and insurance) does not exceed 20% of your monthly income.
Do Your Research
If you use Auto Approve, we can handle this step for you. But if you are refinancing on your own, you should try to do as much research as you can. Talk to friends and family to see if they can recommend a lender. Go online and read reviews to get a sense of how competitive the rates are and see how their customer service stacks up. You should aim to apply with 3-5 lenders.
When you have narrowed your list down, it’s time to apply. Send out all of your applications in a two week timeframe (the credit bureaus give you two weeks where all hard inquiries will count as one hit on your credit score). But if you use Auto Approve, we can handle all of the tedious applications for you.
Sign and start saving.
When your offers come in, be sure to compare all terms. Be sure to compare the following:
- The car loan APR
- The repayment period
- The assorted fees
- The prepayment penalties
There is no limit to the amount of times you can refinance your loan, so keep prepayment penalties in mind. If they are extremely high it might deter you from refinancing again in the future.
Once you determine the best car loan for you, all you have to do is sign and save. At Auto Approve, we can handle the paperwork for you and ensure that your previous loan gets paid off. And that’s it! Auto Approve makes refinancing your car loan as easy as possible.
Refinancing your car loan with Auto Approve is the best (and easiest!) way to start saving money.
The sooner you refinance your car loan, the sooner you can start saving. So don’t wait! Contact us today to get started!