How to Refinance a Car Loan

Signing Finance Documents for Car

 

Are you looking into refinancing your auto loan with a Hannibal area lender – wondering if it’s the right fit for you? Perhaps you’re turning your attention to the possibility of lowering your monthly car payments and saving on interest rates? If those concepts attract you and could benefit your financial situation, then refinancing may be just the thing to look into! Keep reading this guide from the finance team at Shottenkirk Chevrolet to discover what to know when refinancing your car. Be sure to contact us via our online portal if you have any questions!

How Do You Refinance a Car Loan?

Like we mentioned earlier, the main purpose of refinancing is to lower the monthly interest rate you’re being charged. Of course, if your credit has improved significantly since signing the initial loan, your monthly payments may be reduced as well – we’ll talk more about that below.

When researching how to refinance a car loan near Keokuk, it’s important to start with some information about yourself – (i.e.) your credit score and payment history. It’s good to also have a healthy knowledge of how your current loan works, such as knowing your monthly payment amount, interest rate, and loan term length. How do you refinance a car loan? Start by following these steps:

  • Check Your Credit Score: If you’ve been making consistent on-time payments since signing your initial loan, odds are your credit score may have improved in the meantime. Knowing this number will help set your expectations for refinancing.
  • Start Applying: It’s not a bad idea to apply to two or more lenders to ensure you’ve shopped around for the best rates. Make sure to submit these applications within a 14 day window to minimize the impact on your credit report.
  • Evaluate Offers: Now that you have the offers, it’s time to run the numbers to make sure the new offers are going to financially put you in a better position than your initial loan. You can utilize resources such as our online payment calculator tool to help you compare your offers!
  • Decide Loan Term: You’ll probably have offers of varying loan terms (the length of the loan.) You’ll need to decide if a longer or shorter term loan fits your financial plans. With a longer-term loan, your monthly payments will be smaller, but you will pay more in interest in the end.

REMEMBER: Refinancing isn’t a one-size-fits-all kind of thing. It’s difficult to say that there’s any one best way to refinance an auto loan. The best refinancing strategy for you may very well be not refinancing at all! The more shopping around you do, the more offers you’ll have to consider – so use this variety to your advantage!

What to Know When Refinancing Your Car

Aside from the general process, there’s some specifics to keep in mind when you are making the decision of whether or not to refinance your auto loan. Take these for example:

  • Fees: Check your current loan contract to make sure there aren’t any fees associated with paying it off early. If there are, refinancing may not be cost-effective for you.
  • Underwater Finances: If you owe much more than your vehicle’s currently worth, it can be harder to get approved for refinancing.
  • Older Vehicles: Many lenders won’t refinance an older car that has already experienced major depreciation.

If you find yourself in any of these situations, contact the finance center at Shottenkirk Chevrolet. Our experts can give you advice and guide you to options that better fit your circumstances.

How do you refinance a car loan? Now you know! Now that you know more about how to refinance a car loan and what to know when refinancing your car, it’s time to hit the pavement, so to speak. Like we said before, our door is open to anyone with questions about auto-finance – we’re here to help!

Learn About Your Financing Options

Visit our Quincy showroom, just a short trip from Quincy. You can also visit us online or call us to get started!

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