There are many reasons for refinancing your auto loan. Auto refinancing can save you money on your monthly payment and thousands of dollars over the course of your car’s loan. You may have not qualified for as good of an auto loan as you can now. By refinancing your car, you pay off your existing auto loan with a better one. Typically, the goal of auto refinancing is to save money on either your monthly payment or by getting a better interest rate. Sometimes obtaining a loan with more favorable terms for the borrower is the goal. There are plenty of reasons to refinance your auto loan, if you’re wondering whether it’s a good decision for your financial situation, explore our Auto Refinance Solutions.
Interest rates are now lower than when you bought your vehicle
As market conditions and the economy change, the U.S. Federal Reserves change its rates to lenders. Lenders then change their lending programs and rates. Rates are now lower than they have been in a decade. Your interest rate is such an important factor in how much you pay for your auto loan. Lowering your auto loan’s interest rate can save you money on your monthly payments and over the life of your loan. You may qualify for a lower rate now than you could have gotten when you got your current loan.
You want to save money on your auto loan
Auto loans can take up a sizeable portion of your budget. Refinancing your auto loan can be a smart financial decision. If you want to allocate more money to something other than your car payment in your budget or pay less interest over the lifetime of your auto loan, refinancing can help achieve your personal financial goals.
You want to free your self of debt and pay off your auto loan more quickly
If you are able to qualify for a low interest rate, refinancing your current auto loan may save you money over the life of the loan. When you have a lower monthly loan payment you may be able to pay off other debt, make timely monthly loan payments, or have more in your bank account.
Your credit score has increased since you bought your vehicle
Your credit score is a major factor in determining if you can get approved for an auto loan, as well as the terms and rates you qualify for. If you believe your credit score has increased since you obtained your current auto loan, you may be able to save money if you qualify for a new loan with a lower interest rate.
Your current auto loan doesn’t have a great interest rate
Sometimes you get a bad auto loan even if you have excellent credit. This tends to happen to people when they are buying a new car and are more focused on shopping for the car rather than shopping for the best auto loan. Maybe you didn’t know an auto dealer doesn’t always give you the best loan or rate for which you qualify.
You have paid at least your last 6 months of auto loan payment on-time
Paying your auto loan consistently on-time shows lenders that you are able to pay your debts. This may help you qualify for a better loan and save money. If you have not paid your loan on-time in the last 6 months, you may have a more challenging time qualifying for a new auto loan.
You would like to take a vacation from your auto loan payment
Typically, there is a gap between your auto loan payment due dates when you refinance your auto loan to a new one. Usually, there are 30-to-45 days until when the new loan’s first payment is due. Borrowers can put the money for their auto loan payment to something else until their new car payment begins. This can be a nice break for your wallet and can give you the chance to catch up if you are in a financial pinch.