Getting a new car is a fun and exciting time.
The problem is, however, in the heat of the moment you may have not received the best terms on your loan.
With excellent, good, or even poor credit you may qualify for a better rate and a lower monthly payment. Check out our partners at LendingTree to find the best current rates…
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Why Would You Want To Refinance Your Car Loan?
You may be in a better situation than you were when you purchased your car. Your credit score may have gone up or your debt to income ratio may have gone down. Even if nothing changed, there might be a better rate available to you than what you got from the car dealership or bank.
In many cases, you can lower your monthly car payment. That gives you more money each month to throw at your debt… which is the goal.
How to Refinance Your Auto Loan?
The application process usually takes less than an hour. Most lenders make a decision in minutes. Make sure your current loan doesn’t have a prepayment penalty. If it does then most likely getting a refi won’t be worth it.
Also, you may have trouble finding a loan if:
A) You are upside down (your current loan amount is higher than what the car is worth).
B) Your car is 8 years or older
C) Your car has over 100,000 miles on it
A couple of things to keep in mind so you don’t unnecessarily lower your credit score.
First, try to get prequalified before you apply for a loan. That way you know if you are going to find a good deal before you get a hard inquiry on your credit report.
Second, if you are shopping for the best rate and apply for multiple loans so you can choose the best one…
Do it all within a 14-day window. The credit bureaus will only count it as one inquiry that way. When you do apply for the loan you will get a hard inquiry. It will trigger a small drop – about 5-10 points.
Is Refinancing Your Car Worth It?
When you’re working to get out of debt, and you can lower your interest rate and monthly payments then…
Yes it’s worth it.
You can use those extra monthly savings to pay down your debt faster.
The only fees you’ll likely incur for refinancing is a title transfer fee. Around $35 bucks depending on your state. If you go for a longer payment period make sure you are committed to getting out of debt. You will usually have to pay a higher interest rate for the longer loan length. This could be costly if you don’t pay it off early.
See If You Can Get Prequalified Today…
There is no hit to your credit with LendingTree if you check to see if you can get prequalified.
If you’re dedicated to getting out of debt…
Check out LendingTree to see if you can clear up some money in your monthly budget…