What Does Refinancing a Car Mean?

Refinance your vehicle to save money.

If you want to start a new loan on your vehicle and end your old one, it is known as refinancing. People usually refinance because of dissatisfaction with their monthly payment or interest rate.

Significance

If you need a lower car payment, refinance for a longer term. Or, if your current rate is high because of credit issues during the time you originally purchased your car, you can reduce your payment and possibly your term at the same time if your rate is significantly lower.

Credit

If your credit has suffered since your original loan, you probably cannot take advantage of lower rates or a longer term. Generally, refinancing works out best for those who have good to excellent credit.

Resources

It is not likely that your current lender will refinance your car loan. You can apply for a loan at just about any local bank you want to do business with. Credit unions often offer the most competitive interest rates. Dealerships do not deal with refinancing.

References

• Edmunds: Refinancing Your Car Loan