When Is A Good Time To Refinance An Auto Loan?
Most consumers are familiar with refinancing a mortgage loan as a way to reduce their rate and monthly payment. However, not as many are familiar with the process of refinancing an auto loan, know what to expect, or when to consider refinancing this type of loan.
While everyone’s financial situation is different, typically the best times to refinance are when:
- Current interest rates are lower than your existing auto loan
- Your credit score has improved from when you originally took out your loan (meaning you likely to a lower rate)
- You are looking to save money or lower your monthly payment
Benefits of Refinancing Your Auto Loan
Refinancing your auto loan can be a great financial decision. Not only can it lower your monthly payment but it can also benefit you if you are interested in:
- Paying off your loan faster, but not interested in paying more each month
- Reducing the interest paid over the life of the loan
- Adjusting the term length of your loan, either shorter or longer
- Looking to switch your auto loan to a new lender who offers better customer service
Use the chart below for a quick comparison.
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Save More By Ask About Additional Incentives Or Payment Discounts
When considering an auto refinance ask your lender if there are incentives or discounts that may lower your payment even further.
For example, many lenders, including TEG, offer borrowers an additional .25% interest rate reduction just by setting up recurring automatic payments.
That’s a simple and effective way to put even more money back in your pocket.
What To Expect With An Auto Loan Refinance
Refinancing your auto loan isn’t complicated or time consuming. You can complete most applications online in less than 15 minutes, and we often make lending decisions within 1-2 business days.
To streamline the application process, gather the details of your vehicle and current loan before you begin. Details such as the amount you owe, name and address of the current lender, make, model and year of the car and estimated mileage. Like most loan applications, the lender will ask for some basic personal information including your social security number and income.
After we approve your loan, you can likely sign all the paperwork online. A lending officer may ask you to review the terms and conditions of the loan, but in most cases, you can do this over the phone, and it only takes a few minutes.
Your new lender will pay off your higher-rate loan and provide instructions for making your new, lower monthly payment after you sign the loan documents.
Most borrowers can complete the auto loan refinance process in under a week.
If you are thinking about refinancing your auto loan read more about auto loan refinancing through TEG or get in touch to ask a question.
