How to Refinance a Car Loan
The purpose of refinancing is to decrease the interest rate of your monthly car payment. So, how do you refinance a new car loan? You need to know the current payment amount, review all documents, and contact your lender to confirm the interest rate and payment.
So, how do you refinance a car loan? Once you’ve got all the information above, take these steps to secure a better rate:
- Check Your Credit Score: Check your credit score to see how much it has improved since you purchased the vehicle. If it hasn’t improved, you’re unlikely to secure a better rate.
- Start Applying: Apply to a variety of auto refinance companies, including local Scottsdale and Mesa lenders, to see who will offer the best rate. Complete all applications within a 14-day window to prevent negative impact to your credit score.
- Weigh Offers: Evaluate each offer to see which one will be the smartest financial decision. Make sure to consider every angle.
- Decide Loan Term: If you need the lowest monthly payment that you can get, a longer loan term might be advantageous. However, since longer terms translate to higher total interest costs over time, a shorter term is preferable for those who can afford to pay more.
What to Know When Refinancing Your Car
Knowing when to refinance a car loan is just as important as knowing how to do so. Here’s what you should know if you’re still on the fence about refinancing:
- Fees: Be sure you will not be charged fees from your original loan lender for paying the vehicle off early.
- Underwater Finances: If you owe more than the vehicle’s worth, it can be difficult to get approved by lenders for refinancing.
- Older Vehicles: If the vehicle is too old, many lenders will not refinance due to major depreciation.
If you’re in any of these situations, contact our finance center near Fountain Hills for help.
Explore Finance Options at Mercedes-Benz of North Scottsdale
Now that you’re aware of what to know when refinancing a car, make sure you find out what a good interest rate is! Contact us with any finance and insurance questions today.