If you’re refinancing your vehicle loan, you should make sure to ask about the fine print.
Be sure to ask your new lender (or possible lenders) the following questions before you sign:
What is my new interest rate?
What will my new APR be? What fees are included in that?
What are my loan term options?
What will my new monthly payment be?
When will my payments start on the new loan?
What paperwork do I need to file and what paperwork will you be handling?
Are there any prepayment penalties on this loan?
And make sure you read the fine print on your current loan. You want to make sure your savings outweigh any fees or prepayment penalties that might come up when you pay off your existing loan early.
Read on to learn more about what you should watch out for when refinancing, why each question matters, and the best way to refinance.
In this guide you’ll find:
A breakdown of the essential questions to ask when refinancing a car
What to check for on your old loan before refinancing
The best way to refinance
Refinancing your auto loan is a great way to save money, if you do it right. Here are the most important things to ask about or check in your new loan agreement before signing.
Ideally, when you refinance, you will secure a lower interest rate than you had on your old loan.
The best way to secure a better interest rate is to time your refinance based on factors like market rates and your financial picture (especially your credit score). If you’re worried you won’t qualify for a better interest rate, consider taking steps to improve your credit or adding a cosigner or co-borrower with good credit.
Your annual percentage rate, or APR, is the most important thing to know and understand when getting any new loan or financing.
Your interest rate matters, but it doesn’t give you the whole picture. The APR determines what you actually pay — it’s your interest rate plus any fees.
If your APR is much higher than your interest rate, you’ll want to ask for a breakdown of what you’ll be paying for. Compare your new APR to your old one to get a sense of how much you’ll be saving.
If you’re on the fence about refinancing and got your initial loan through a dealership, it’s definitely worth getting a quote, because dealerships often add markups to their loans that make the APR much higher than the interest rate you actually qualified for.
When you refinance, you have the option to shorten or extend your loan term. Shortening it might mean a higher monthly payment but much more money saved over time. Lengthening it may cost you more in interest, but can help lower your monthly payment if your budget is tight.
Make sure you understand your loan term and how it’ll affect how much you pay in interest and fees over time.
Review the final number on your new monthly payment before you refinance.
This is, of course, the thing most people refinancing their vehicle will be most concerned about. It can be easy to get lost in interest rates and APRs, but you want to know, going in, the actual numbers before you lock yourself into a new payment.
It is common to get an initial quote when you’re looking to refinance, but depending on the specifics of your finances, that quote may not match your final new monthly payment.
When you refinance, your new loan payments may not start right away—in fact, some lenders don’t ask for your first payment until three months after the paperwork is signed.
If money’s tight, refinancing with a lender that offers this option can be a great way to get some breathing room. Just make sure that your old loan is paid off before you stop making payments!
There’s a lot of paperwork whenever you’re getting a new loan. When you refinance your vehicle, you’ll need to file paperwork with the DMV, for example.
Some lenders will handle some key submissions for you, while others will leave it to you.
When you refinance with Auto Approve, our refinance experts will handle all the paperwork for you, including the DMV.
Prepayment penalties can take a big bit out of your potential savings.
While most people don’t need to refinance more than once, it’s a good idea to make sure you know what would happen if for some reason you chose to refinance again.
When you work with Auto Approve, you get a dedicated refinance expert to guide you through the process and access to our network of over 50 trusted lenders—and we’ll never mark up your rate. Customers save an average of $135-$500/month.
Get a free quote to see how much you could save.
Before you lock in a refinance, make sure you know:
Your old APR and interest rate
Your loan term and how much time is left on your loan
What you’ve been paying monthly
If there are any fees or prepayment penalties you’ll have to pay when refinancing
If you’d rather have your questions answered before you need to worry about asking them, refinance with Auto Approve. When you apply through Auto Approve’s trusted lender network, you’ll also get help from our refinance experts, who will talk you through your options and the fine print to help you find the right deal for your unique financial picture, and handle the paperwork for you.
Because it’s a smart financial move: you can save hundreds of dollars a month.
Refinancing can lower your monthly payment through savings, extending your loan term, or both, and give you a few months without payments when your budget is stretched too thin.
To make a change. That is, it's the only way to add or remove a co-borrower or to change your loan term.
These are the key things to ask about when refinancing and why they matter — and now you know how to skip the questions and go straight to your best available refinance.
Refinance with Auto Approve to get all the answers you need without the legwork.
