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Should You Refinance Your Car?

Woman Leaning Out of Car on Wintery Road

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:

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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