How to Refinance a Car Loan

Man with Car Keys

How do you refinance a car loan? Find out the best way to refinance an auto loan and whether your loan agreement allows you to with our guide below. We’ll walk you through what it is, how to do it, and whether you’re a good candidate for refinancing. Contact our finance department at Ole Ben Franklin Motors with further questions.

How Do You Refinance a Car Loan?

Refinancing lowers the cost of financing if your credit score has risen since you took out the car loan. If you’ve been making on-time payments, then it’s likely it has. Before you decide to learn how to refinance a car loan, there are some details to consider. Review your documents as it may have a clause about refinancing. Other things you should do are as follows:

  • Check Your Credit Score: Your credit score will determine whether you’re able to refinance your car loan. Lenders want to see proof that you’ve significantly improved your credit score since taking out your car loan. Making on-time payments every monthly positively impacts your credit score.
  • Start Applying: Fill out applications to several lenders, which will boost your chances of getting a better offer.
  • Evaluate Offers: Evaluate your offers and take the time to run the numbers. You can use our payment calculator to make this task easier.
  • Decide Loan Term: Determine whether you want a short-term loan or a long-term loan. Shorter terms require larger monthly payments but less interest, while long-term loans require the opposite.

The best loan term option depends on your current financial situation, but ideally, you want to pay lower interest rates.

What to Know When Refinancing Your Car

Some lenders try to prevent customers from refinancing by adding clauses that charge them for ending their loan term early. If this is the case for you, then refinancing is not an economical option. Some things you should consider before moving forward include:

  • Fees: If your contract charges you for refinancing, you should stay with your current lender.
  • Underwater Finances: Getting approved for refinancing is more difficult for Farragut drivers who owe more money on their car than it is worth.
  • Older Vehicles: Many lenders will decline refinancing your loan if the model is older and has depreciated significantly.

Learn More About How to Refinance a Car Loan at Ole Ben Franklin Motors

Refinancing a car loan is a good option for some Sevierville and Seymour who took out a car loan when they had bad credit. Getting a good deal on a car loan when you begin financing is best to avoid the hassle of refinancing a car loan. In-house financing or guaranteed financing offers better deals than third-party financing. It might also be a good option if you’re looking to remove a cosigner. We can help you learn how to remove a cosigner from your car loan as well with our guide. If you have questions about car loans, how to trade in a car with a loan, the best mileage to trade in your car, or buying a used car with bad credit, reach out to the Ole Ben Franklin Motors team for assistance. If you need help calculating the interest on your car loan, Ole Ben Franklin Motors can help.

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