Refinancing Your Car

If you purchased a car with an auto loan from a bank or credit union, or through another credit provider, you may be able to refinance the loan to obtain a lower rate. Lower interest rates more of your monthly payment will go toward paying down the principal balance, or you can elect to make smaller monthly payments over a longer period of time. During the refinancing process, your new lender will pay off your old loan and give you a new loan at a different rate. Here's how to start the refinancing process.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Original loan documents
• Social Security number
• Credit report

1. Research refinancing options available. You can obtain refinancing rates from banks and financial institutions, or by reviewing rates online by services such as the ones listed below.

2. Select a loan provider and submit an application. You will need to apply for a refinancing loan by providing personal information such as your Social Security number, current loan balance and information about your current lender.

3. Pay the loan application fee. Fees for car refinancing are different for each lending institution, but can cost upward of $100 depending on the location, region and policies of the lender.

4. Wait for approval. The car refinancing approval process can take up to a week or more depending on the financial institution. Final approval is complete when the lender provides you with closing documents for the loan.

5. Receive confirmation on the title transfer. The new lender for your car loan will now assume the title for your car; you may have to pay a fee for this portion of the transaction.

6. Start making payments to your new lender. Your new lender will provide you with payment stubs and an official loan agreement document. You will need to begin making payments according to the due date listed on the agreement.

Tips & Warnings

• Most lenders will run a credit report as part of the application process, so make sure your credit report is accurate and up to date.
• Some lenders allow you to select your payment date, so choose something that is most convenient for you
• If you originally purchased a car through a dealership, you may be a good candidate for a refinance loan from another lender; car dealership loans typically offer higher than average interest rates.
• Read all of the fine print in the refinancing application to make sure you understand the total cost.
• Refinancing a loan near the end of your current loan agreement may not save you any money when you factor in loan fees.

Resources

• LendingTree Website
• Auto Loan Calculator via Bankrate.com