Refinance A Used Car Loan In 5 Easy Steps
Refinance A Used Car Loan In 5 Easy Steps
Your car may be one of your most valuable possessions. Without it, you would have a lot tougher time than you do now in just getting around town to go shopping, go to work, and visit friends.
Of course, a car is not cheap to own and maintain. Not only are there those car payments to think about, but you also have to pay insurance, gas and maintenance expenses as well.
While you do not have much direct control over your insurance, gas or maintenance expenses, you may have more control than you think over the amount of your monthly car payments. This is the case if you are able to refinance your used car loan at a lower interest rate or if you can stretch out the loan over more time.
If you want to potentially save money on your auto loan payments each month, here is how to refinance a used car loan in 5 easy steps:
1. Get a sense for what your car is current worth:
Start by researching your car's current value on the market today. Try the Kelley Blue Book for starters. Obviously, you will need your car's value to be higher than the outstanding principal on your current loan.
2. Have a look at where current average auto loan interest rates are today relative to historical averages:
Next, take a look not only at today's average auto loan interest rates, but also the average interest rates for equivalent loans made over the past 1 month, 3 months and 1 year. If it looks like rates are relatively low right now, it could be a good time to refinance your auto loan since you may be able to qualify for a better rate.
3. Check out your current credit score:
Now, request your latest credit score and credit reports from Equifax, TransUnion and Experian. These agencies keep constant tabs on your borrowing and repayment habits. Get a sense of your current score across all three of these agencies. And, while you are at it, take a close look at each of the three reports to see whether you can find any mistakes or other issues that you should get corrected before applying.
4. Get an auto refinance loan quote from your current lender:
You will want to shop around sufficiently for your refinance quote. But, before you do, go ahead and request a quote from your current lender. At the very least, you can use this as a reference quote as you compare it to other lenders' offers.
5. Compare that quote to those of at least 4 other lenders:
Now, move forward with getting quotes from other lenders, as well. Be sure to talk to credit unions, banks, and online lenders to get a variety of quotes.
As you make your decision about which lender to go with, of course the interest rate that each one offers you should be a key factor. But, also take into account factors such as customer service quality and overall reputation.
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