How to Refinance a Car

To refinance your car you need to pay off the original loan you are making payments on right now, and then establish a new finance plan with another bank. In almost all cases the new bank pays off your original car loan, then sets up a new one with you and tarts collecting payments from you right away. You can save $100 or more a month by refinancing your car, and it only takes a few minutes.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Computer
• Car loan
• Car refinancing plan

1. Get your current car loan statement and locate the amount your owe (balance or principal), monthly payment due, and interest rate.

2. Log on to a car refinancing site like InstantLoan.com. Contact a few banks that will refinance cars and can offer a lower rate.

3. Fill out and submit the application to refinance your car. Review and compare the interest rate and term of the loan (number of months the new car financing lasts) to be sure you are getting a better deal.

4. Complete the additional paperwork once you feel you have found the best car refinancing rates and terms. You now must make payments to the new car financing company. They will arrange to pay off your old loan and have the title mailed to their offices.

Tips & Warnings

• Refinance a car only after your credit score has increased, or after a significant interest rate drop.
• Avoid refinancing at a slightly lower interest rate for a longer term. This only stretches out your payments, and can actually cost more in the long run.

Resources

• Used car loans
• Refinancing used cars