Shopping for and buying a new car can be stressful and time-consuming. Buyers often rush through the buying process because they can’t wait to drive away in their new rig. But when the dust settles, they realize they could have found a better interest rate or bargained for a better price. A great way to get a better deal and save money on your car is to refinance your auto loan.
What you will need:
- 10-day payoff quote from the financial institution that holds the lien (loan)
- Current registration on the vehicle you are refinancing
- Mileage on the car
- The name of your insurance company and your policy number
- Income documents (ex: last two pay stubs)
- Original title (only needed if you own your vehicle and you want to refinance for cash)
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Pros to refinancing:
- Lower interest rates
- Flexible terms often available
- Lower monthly payments
- Faster equity accumulation
Potential Issues to refinancing:
- If your loan to value is too high (meaning you owe more on the vehicle than it is worth), you may not be able to refinance now.
- Extended warranties and other dealership options added to the loan can affect your ability to refinance.
Another great option to consider when refinancing your car is to use the equity you have earned to pay off credit card debt or other high-interest unsecured loans. Even better, if you own your car, free and clear, you can use a car loan to pay down high-interest rate debt (like credit card or personal loans) at a lower interest rate. This will help you pay the debt faster. If you want to save money monthly, take a closer look at your credit report. Determine which loans could be refinanced at a lower interest rate to save more.
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