Three Steps to Refinance a Car Loan
At a basic level, refinancing is the process of replacing your current car loan with a new one. While people refinance their cars for many reasons, you ideally want to reduce both your monthly payments and the cumulative interest charge you pay over the course of your loan. Here are three steps to take to refinance your car loan.
1. Find Your Auto Refinance Lender
While you can sometimes work with your current car loan lender to refinance your car, you usually need to find a new lender if you want to refinance. However, it can take some leg work to find a lender that is a good fit for you.
Many lenders work with specific segments of the credit spectrum or with cars of certain specifications, so some lenders will not work with you simply because you do not fit into their target market(s). And some of the lenders that will work with you might not offer you the most competitive loan terms you can get. So, refinancing a car can require some shopping.
For this reason, many refinance customers use car loan refinance services that can curate refinance offers for them. A good auto refinance service will work with a large number of reputable lenders, will pre-qualify you with competitive refinance offers from that network, and will take care of you throughout the entire process.
2. Consider Your Refinance Options
Naturally, once you receive refinance offers, you need to decide which loan is right for you. Carefully compare how much you are saving per month with how much you are saving over the life of your loan.
You should also consider if you want to add any service protection products to your loan such as Vehicle Service Contracts, GAP Coverage, or Tire and Wheel Protection.
3. Sign Your Documents
Once you have decided on a loan, your last major step in the refinancing process is to sign your documents. Once your loan funds and your old lender is paid off, you should be all set with your new car loan.