How to Refinance a Car Loan

If you’ve heard other North Olmsted drivers talk about refinancing their auto loans, you may know that refinancing can lower your monthly car payments and save you money on interest. But what is the best way to refinance an auto loan? What do you need to know when refinancing? Westside Toyota’s finance team is here to cover auto loan refinancing so you can make an informed decision.

How Do You Refinance a Car Loan?

The primary goal of refinancing an auto loan is to lower the interest rate you’re currently paying, saving you money over the term of your loan. Before starting, you’ll need to review all of your loan documents to confirm your current monthly payment, interest rate, and terms. With all that information gathered, follow these steps to begin your refinancing journey:

• Check Your Credit Score: Your current credit score will have a big impact on whether or not refinancing is right for you. If you’ve been paying your bills on time and haven’t accumulated any significant debt, your credit score may have improved, making refinancing a viable option.
• Start Applying: Pick several automotive refinancing companies and apply to them all to see which will give you the best new interest rate. Be sure to submit all the applications within a 14-day period to minimize the negative impact the applications may have on your credit score.
• Evaluate Offers: After you’ve received all of your refinancing offers, run all the numbers to see which will save you the most money. You can use our online payment calculator to help.
• Decide Loan Term: You’ll likely be given options about what length of time you’d like to pay your loan over. A shorter loan term will often result in larger monthly payments, but less interest. A longer loan term will have smaller monthly payments, but with the tradeoff that you will pay more in interest over the term of the loan.

Only you will know the best way to refinance your auto loan based on your situation, so review all your offers carefully and compare them to your existing loan and budget.

What to Know When Refinancing Your Car

When deciding whether or not to refinance your car loan, there are a few other factors you should keep in mind:

• Fees: Your original car loan may have fees associated with paying your loan off early. Find out what these fees are, if any, and add them to your overall cost of refinancing to see if the added penalties will make refinancing cost-effective.
• Underwater Finances: If your vehicle has depreciated sharply and you owe more than the car is currently worth, you may not be able to be approved for auto loan refinancing.
• Older Vehicles: The age of your car will be a factor in determining whether or not you can refinance. Many lenders won’t refinance an older car with severe depreciation.

Find the Best Way to Refinance Your Auto Loan at Westside Toyota!

Now that you know how to refinance a car loan, you’re ready to take the next step! Apply for refinancing today and contact Westside Toyota with any questions. For more information about finances and purchasing a car, check out our car-buying tips.