Refinance Car Loan Tips and Tricks

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, - December 4, 2013

Refinance car loan rates often beat out an existing loan with a low APR. Learn when to refinance, and how to get a quick auto refinance approval.

A refinance car loan is an effective way of saving money. A lot of people pay high interest rates on their car loans and overlook the benefits of auto refinancing. It helps you focus on repaying the principal of the loan rather than paying a lot of money on the interest. Even though refinancing your car loan is a straightforward process, you need do your homework and evaluate your credit score.

See what kind of interest rates you can get >>

Choose the Right Auto Loan Lender

Your first step in refinancing your car loan should be to find an auto loan lender who offers a low Annual Percentage Rate (APR). Research lenders and see what they have to offer. Consult your friends who have had an experience in auto refinancing. Ask them to the good and bad points about their auto lender company and be sure to ask them how much they lowered their car payment and how much they ultimately saved with auto loan refinance.

Since most refinancing companies have their own calculator, it is advisable to shop around and check which company provides the lowest interest rate. You can determine which company has a lower interest based on the monthly payment it estimates you need to pay. Check at least three different companies before settling on one.

Use an Auto Loan Refinancing Calculator

An auto loan refinancing calculator is a great tool that you must take advantage of. Most companies that allow consumers to refinance their auto loan have a refinancing calculator. This calculator will give you an estimate on how much your monthly payment will be, based on the remaining balance, the interest rate and the new term.

Get started by finding your refinancing rates now >>

Run a Credit Check

Before you refinance your auto loan, it is best to run a credit check to determine your current credit standing. As with any financing application, you need to know whether you have a bad credit history, since this may determine the interest rate for the refinance auto loan. There are several accredited websites where you can check your credit report or history.

Don't Apply if Your Credit Score Is Below 600

If your credit score is not impressive, you will not gain maximum benefits from refinancing. Interest rates are determined by your credit score. If you have a good credit score, it is likely that you will get a lower interest rate. You should have a good credit history before you apply for refinancing.

Consulting a credit repair company to improving your credit score will prove helpful. It is a myth that your credit score drops if you run your credit report online. It is common for auto dealers to use your ignorance about your credit history to charge you higher interest rates.

Consider Even if the APR on Your Car Loan Is Low

Do not rule out the possibility of getting a lower APR than your current loan. Even if your current APR is low, you have a chance to save money by refinancing your loan and finding a lender who will offer you a lower APR.

Gather Information about Your Current Loan

Refinancing your auto loan is a great way to lower your payments. However, before you can lower your car loan payments, you first need to determine specific information about your current car loan.

Find out how much the remaining balance is. When you refinance an auto loan you will be asked for this information. You will also be asked for the current interest rate, as well as the current loan term or the length of time you previously planned to pay the loan.

Plan How Long You'll Take to Pay off the Loan

Since the purpose of refinancing your car loan is to lower your monthly payment, you need to plan how long you want to pay off the new loan. This is a great way for you to schedule and fix your finances.

By knowing beforehand how long you will pay for something, you'll be able to plan ahead financially. It is important to plan several dates, so you can determine the best time frame for you to pay off the loan.

Tips for a Speedy Auto Refinance Approval

  • Auto refinance loan applications need to be in the same names (with exact spelling) as the names on your current auto loan.
  • It is important to provide accurate information about your car: the year, model and the Vehicle Identification Number (VIN).
  • Your auto loan refinance amount should not be higher than the value of your car.
  • People with good credit tend to have too much credit, and too many old accounts that they no longer use. Auto lenders view might view this as a risk in offering you a good APR. As a result, it is important to close all the old accounts.
  • Try to achieve a clean credit report with no charge offs.
  • A previous car loan or home mortgage on your record definitely increases the chances of the loan approval.

See if you qualify for refinancing >>

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