Chris O'Shea
Refinancing a car loan can be a budget-boosting maneuver. If your credit has improved since you took out the loan, you could save money by refinancing. If the original loan has a high-interest rate, you can save some cash by getting a new loan with a better rate.
Here is how to refinance your auto loan in 5 steps:
1. Find the Value
The first step toward refinancing a car loan is to find out how much your car is worth. You can use sites like Kelley Blue Book to determine the price of your car. Once you find the value, you can see if you owe more on your loan than your car is worth. If that’s the case, it can be hard to refinance. You’re better off waiting until you owe less on the loan than the car is worth.
2. Check Credit
Pull your credit score to see how likely you are to get offered a good loan rate. The higher your credit score, the better the refinancing offers will be. If your score is low, work on increasing your score before refinancing your auto loan.
3. Gather Important Documents
Before you apply for your new loan, gather all the necessary documents. Here’s a quick look at what you’ll need:
- Social Security number
- Driver’s license
- Car registration
- Insurance info
- Vehicle identification number, or VIN, of the car
- Proof of income and employment
4. Shop Around
Now that you’re ready to apply for a new loan, shop around for the best offers available.
5. Apply
Find the best refinancing offer and apply. If you are approved, most lenders are pretty good at letting you know pretty much instantly.
Do One Thing: Make sure your credit score is as high as possible before applying for a new auto loan.
Jean Chatzky
