How to Refinance a Car Loan After Buying a Car

Whether you bought a car recently and you feel like the interest rate is too high or interest rates have dropped since you established your car loan, you always have the option of refinancing you car loan after you buy it. Learn how to go about finding a new car loan and how to compare loans and interest rates to find the best new car loan for you.

Difficulty: Moderate

Instructions

Gather Rates and Terms from Different Lenders

1. First, you have to gather information from local banks and credit unions that offer auto loans. When gathering this information, be sure to obtain the interest rate, the term of the loan and any costs associated with refinancing the loan. You'll want to obtain rates and term information from at least three lenders so that you can compare and find the best loan for you.

2. Choose the car loan that has the best terms and interest rate for you. After you gather the auto refinance loan information, be careful to compare each side by side and line by line to determine which loan fits your needs the best. A loan may have a low interest rate but if the term of the loan is short (less than five years) the monthly payment may still be too high for you to pay it. So it's important that you look at and compare more than just the interest rate.

3. Submit your application. Once you choose the loan you're interested in, submit a car refinance application to the bank or credit union. You may be required to submit other documentation along with the application such as proof of income (pay stubs or tax returns). Once you're approved for the new loan, you'll have to sign some loan paperwork, your old loan will be paid off by the new loan and you'll start making your new loan payments to your new lender.

Tips & Warnings

• Be sure to read and understand all of the loan documents before you sign anything.

References

• How to Refinance a Car