The value of a car can be easily tracked via the NADA or blue book guide. If the vehicle is in reasonable shape and doesn’t have too many miles, most any lender can give you at least a quote on loan to refinance your car.
Working With A Lender You Know
If you currently work with a bank or have savings and checking accounts at a credit union, you can probably get a better than average interest rate on your car refinance. For those who are trying to rebuild or repair their credit, setting up an account at a credit union and routing their direct deposit payments into that account can increase the chances of getting a vehicle loan. As per the experts at Lantern by SoFi, “Refinancing your car loan can lower your interest rate and save you hundreds and even thousands of dollars over the term of your loan.”
Banks and financing companies that offer vehicle financing may offer great deals on financing as promotional offers, but once you are a member of a credit union, you will have access only available to members. If you’re looking for credit counseling or a consolidation loan, membership in a credit union is a great choice.-
Set Your Target Before Your Refinance
Because many lenders can easily get the value on your car when you’re looking for a loan, getting pre-approved is an easy first step. If you have a savings account and can get a new loan for your car on that same account, review your goals.
If your goals are to build up savings, discuss setting up an automatic withdrawal to cover the payment and route the remaining dollars into your savings account. If your goal is to pay down debt, you can route the extra cash into your checking account and put the extra on your target debt.
Is It Worth Working With A New Lender?
If you have been working to improve your credit rating or have cash for a down payment, you may be able to get a few points of interest shaved off. If you need to lower your expenses, it may make more sense to look for a new lender who can give you longer terms, such as a 6 or 7-year loan.
Review the Terms of Your Current Loan
Before you go into trouble applying for a new car loan, make sure your current loan has no prepayment penalties. While these are rare, you could end up doubling up on the interest you have to pay over the life of the loan. Be aware that applying could lead to a hard pull on your credit report; if your rating is close to the break between good and average, you could be disqualified for a lower interest rate.
Lower Payments = More Interest
Refinancing your current car loan is a great way to lower payments; if you’re struggling to cover all your debts each month, refinancing the existing balance on a 5-year loan after paying on it for two years could free up cash each month. You do need to be sure that lowering the payment is worth the extra interest with a car loan refinance calculator.
Refinancing your car can be extremely beneficial, but you will need to do your homework to make sure it’s the best deal for your situation. If you have goals for the freed-up cash, start with calculators to get the best deal.