How to Refinance a Car Loan
Updated On January 13, 2022
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
If you want to refinance a car loan, the process to refinance your car loan makes sense in several circumstances:
- Interest rates are low. You want to refinance your car loan when the interest rate on your new loan is lower than the interest rate on your current loan. When you refinance, it is considered a used car loan, which makes sense since you have had our car for awhile. Fortunately, interest rates are relatively low so it is an opportune time to refinance car loan rates now before interest rates rise.
- Your credit score is stronger. If you have improved your credit card since you last got an auto loan, then now could be a great time to refinance a car loan. A stronger credit profile signals to lenders that you are financially responsible and trustworthy. It also increases the likelihood, from a lender’s view, that you will repay your car loan. Therefore, you can qualify a lower refinance car loans rates. Even slightly lower rates for your car loan can save you interest cost, which means more money in your pocket.
- You didn’t get the best rate then. Even if you had strong credit when you bought a car, that doesn’t mean you got the best auto loan rates. Today, there may be lenders who will refinance your car loan at a lower rate. The ability to refinance a car loan at a lower interest rate can save you significant money.
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When Not To Refinance A Car Loan
The decision to refinance a car loan may not make sense in one of the following scenarios:
- Car value less than loan balance. The value of your car is lower than the outstanding loan balance.
- Car age.The age of your car is old compared to the maximum age that a lender will refinance your car loan.
- Balance too high. The amount you want to refinance is more than the maximum amount for which a lender will refinance your car loan.
You can always check the market value of your car on Kelley Blue Book, Edmunds or Auto Trader.
How To Save Money When You Refinance Your Car Loan
The decision to refinance your car loan can save you money because you are getting a new car loan with a lower interest rate than your current car loan. The proceeds from the new car loan are used to pay off your existing car loan, and then you only will make payments monthly on your new auto loan. The lower interest rate means you will save money each month, since there is less interest.
If you have a stronger credit profile and make stable income, you may qualify for a lower interest rate. Auto loan lenders like to refinance a car loan for a borrower with a higher credit score because it demonstrates financial responsibility and creditworthiness. This provides more comfort that you are a responsible borrower who will repay the auto loan in full.
How To Refinance A Car Loan: The Process
“How do I refinance my car loan?” is a popular question asked when people want to know how to refinance a car loan. The process is simple and straightforward.
- Compare refinance auto loan lenders. To refinance your car loan, you can use Mentor Money for the best refinance auto loans. Mentor Money can help you compare car loan rates for cars side-by-side to find the best match for you.
- Apply online. You can apply directly to refinance your auto loan with one of Mentor Money’s partners.
- Fast application. The application is online and can typically be completed in 10-15 minutes.
- Approval decision. The good news is that the lender will respond often within 24 hours to let you know if you have been approved to refinance your car loan.
Best Rates To Refinance Auto Loans
On Mentor Money, you can compare cars side by side for the best rates to refinance auto loans.
If you want to refinance a car loan, you get compare the lowest rates to refinance your car loan.