How to Refinance a Car Loan

Calculator with Refinance on Display
If you are looking to have lower monthly car payments and you want to spend less in interest, there’s good news. Refinancing your car loan may be a smart financial decision for you. The finance experts at Auffenberg Volkswagen are here to explain the benefits of refinancing and how to do so, so you can decide if refinancing makes sense for you. We are glad to discuss how to refinance a car loan in East St. Louis!

How Do You Refinance a Car Loan?

Why do drivers in the Madison area refinance their car loans? They want to be charged less each month in interest. Before you can refinance, you have to know what your current interest payments are. You can take a look at your loan information or speak with your lender about what you are currently paying in interest. After you have obtained the necessary information, simply follow the steps below:

  • Check Your Credit Score: Have you consistently been paying all of your bills in a timely manner since the time you bought your car? Your credit score has likely seen a boost, so it may be beneficial to see if you can get a lower interest rate with your improved credit score.
  • Begin the Application Process: It is a good idea to apply to multiple automotive refinance companies. This allows you to compare rates to ensure you are getting the best deal possible. Another tip to keep in mind is that you will want to submit all applications within a 14 day period. This helps to minimize the negative impact the application process can have on your credit score.
  • Take a Close Look at All Offers: Take a close look at all of the offers you have received. You want to make sure the offer matches what you are looking for. If you would like to compare offers, you can use our payment calculator.
  • Choose the Right Loan Term: One of the biggest decisions you will need to make is what type of loan term you prefer. If you opt for a shorter-term loan, your monthly payment will be larger, but you will end up paying less in interest over time. With a longer-term loan, you will pay less each month when it comes to your payments, but you will end up paying more in interest.
Car Balanced Against Coins on a Scale

Determine which type of loan term you want based on what’s best for your current financial situation. Sometimes it’s easier to just roll your loan into a new one, trading in your car for a new vehicle and upgrading your ride.

What to Know When Refinancing Your Car

Before you make a final decision on refinancing your car, there are a few more details that you should know:

  • Fees: See if your original car loan includes anything about fees for paying the loan off early. If it does, it may not be in your best interest to refinance.
  • Underwater Finances: Do you owe more on the loan than what the car is worth right now? It may be more of a challenge to get approved to refinance the loan.
  • Older Vehicles: Do you drive an older vehicle that has already gone a substantial amount of depreciation? Your application may not be approved by the lender if this is the case.

If any of the situations above apply to you, don’t worry. The finance experts at Auffenberg Volkswagen can discuss your options with you.

Financing is Stress-Free at Auffenberg Volkswagen

Do you still have additional questions regarding what you need to know when refinancing your car? Do not hesitate to reach out to the team at Auffenberg Volkswagen. We want to help make vehicle ownership as affordable as possible.

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