Benefits of Auto Loan Refinancing and How to Get it Done

Having a car is an absolute necessity in life nowadays. If you don’t have a reliable car, you are sorely missing out on things that you both want and need to do, like commute to work or drive to the local grocery store. Unfortunately, getting a car can be expensive and your current loan rate might reflect this undesirable fact. Refinancing can be an important component of owning your vehicle, and it can be done no matter how old your current loan is. Many people wonder how soon can you refinance a car loan from the start date of your current one, but there generally is no time frame as it can be done immediately.

What is Auto Refinancing?

Auto refinancing essentially removes your old loan and puts your name on a new one with, hopefully, a better rate. When you refinance a current car loan, the loan will become null and void and your new loan will be what you pay over the course of several years.

Reasons to Refinance

There are a variety of reasons you might need or want to refinance a car loan. For one, if your current loan is too expensive and the interest too high, refinancing can substantially lower those payments and make them more affordable. Likewise, you can extend the length of time it takes to pay off the loan, which allows you to turn a three year loan into a seven year one. If you have a co-signer who you’d like to take off the loan, refinancing can do this easily for you. Sometimes have a co-signer is a great idea.

The Fine Print

Refinancing doesn’t come with its risks and disadvantages. Because you’re switching lenders, you might get locked into a variable rate that can change from month to month. Despite going into a refinanced loan with a four percent rate, the APR could be upwards of 15 percent by the end of the fiscal year because of variable changes. This is why it’s important to read the fine print on any loan you choose to go with for your vehicle. You want a company that specializes in refinancing and offers superior customer support.

Finding a Lender

Most auto loan lenders provide refinancing to existing and new customers. They will work with you to get rid of the old loan and provide you with a new one with a brand new monthly bill. Your credit score and financial history will have an effect on the type of interest and loan you can receive. If you have a bad credit score, you might not be eligible for refinancing with most lenders. Doing diligent research and ensuring that you’re getting the best deal will make a huge difference when you’re trying to lower those monthly payments and reduce what you pay just to own a car. You can also use a variety of online lender websites to figure out what types of refinance options they provide to their clients.