How To Refinance a Car Loan

When you first got your auto loan for a new vehicle or used model, perhaps you wanted to have lower monthly payments and a better interest rate. The good news is that you can refinance your auto loan to improve your loan terms! The key is that you should already have been paying your bills on time and in full since you started your auto loan in Indianapolis. You could save some money on your monthly expenses with a refinanced auto loan.

Find out how to refinance a car loan with our guide from Lafayette Volkswagen. We’ll show you the best way to refinance an auto loan and what to know when refinancing your car. 

How Do You Refinance a Car Loan?

We’ll start by giving you more details on the best way to refinance your auto loan. We’ll teach you how to refinance a car loan the right way the first time.

What to Know When Refinancing Your Car: Check Your Credit Score

Since you’ve purchased your new or used vehicle, your credit score may have improved because you’ve been making payments on time. This is good to know when refinancing your car because you’ll have a chance to save money on your monthly bills. If it’s been a year since you obtained your auto loan, get your free annual credit report. See how your credit has improved since taking on the auto loan. 

How Do You Refinance a Car Loan: Start Applying for Auto Loans

Apply for financing to ensure you get the best rate among several financial institutions. Make sure you submit all applications within a 14-day period. Applying for loans too many times can negatively impact your credit score. We want you to know how to refinance a car loan the right way so you can get the best possible results.

How Do You Refinance a Car Loan: Evaluate Your Loan Offers

Compare the new offers coming back to you to see which one gives you the best deal. You may get a lower monthly payment. You can use our payment calculator to do some quick math as you set a goal for what auto loan terms you want.

What to Know When Refinancing Your Car: Decide on Your Loan Terms

Start by deciding whether you want a shorter or longer term for your auto loan. A shorter term, anywhere from one to three years, the loan will require larger monthly payments. But you’ll pay less cumulative interest. With a longer term loan, your monthly payments will be smaller but you will pay more in interest overall. 

The best way to refinance an auto loan should be based on your current circumstances and your financial goals. Not all offers may be perfect or exactly what you want. But a lower monthly payment can save you money and free up more of your monthly expenses in Avon.

What Else to Know When Refinancing Your Car Loan

Keep in mind a few other things to know when refinancing your car. You could save even more money with these tips.

• Fees: Your original auto loan may have fees associated with paying it off early. It’s not common, but it could be in there. Contact your current lender to be sure. 
• Underwater Finances: If you owe much more than your current vehicle’s value, you might find it harder to get approved for refinancing. Double-check to see if your current auto loan is in good standing.
• Older Vehicles: Many lenders won’t refinance an older car that’s already depreciated a large portion of its value because the loan amount is too small. You might have to pay off that loan first and then sell or trade in your current vehicle before getting auto financing on a different vehicle.

Have more questions? Contact our auto finance experts or call (765) 257-2919 for advice on how to refinance a car loan.

Start Your Next Auto Loan With Lafayette Volkswagen

Ready to explore auto loan refinancing? We’d be happy to help in any way we can to make your current vehicle more affordable for Noblesville drives. When you’re ready for a newer vehicle, value your trade to see what kind of offer you could get for it.