Auto Loan Refinancing: The Ultimate Guide to Savings Thousands on Your Car Payments
If your auto loan payment is high and you struggle to make it on time each month, it may be time to refinance your loan. Auto loan refinancing simply replaces your current vehicle loan with a new one. People refinance their car loans for different reasons. While some are looking for a lower interest rate and lower monthly payment, others may be looking to adjust the term of their loan to pay it off faster. If auto loan refinancing can save you money, it may be your smart choice.
6 Steps to refinancing your auto loan
Review your current loan and budget to determine if refinancing makes sense for your situation. Look at your current interest rate, monthly payment, and payoff amount, as well as the number of payments remaining. Search your paperwork for any prepayment penalties.
Check your credit to be sure you would be eligible for a better rate.
Shop lenders and compare rates, fees, and offers.
Crunch the numbers and determine your savings.
Gather the necessary documents/financial information to apply for a loan. This includes your driver’s license, vehicle registration, VIN number, proof of insurance, proof of income, and existing loan payoff information.
Shopping for an auto loan refi lender
If you are looking to lower your interest rate, it means shopping lenders for the best rate and overall deal. Before you shop around, review your credit report and credit score. The higher your score, the lower your rate. Search online and make some calls to local credit unions and banks to find the right deal for you. As mentioned above, compare rates, terms, and all fees involved with the refinance. Added fees and other costs may outweigh a slight difference in rate. When shopping around, ask for a list of all fees upfront and in writing.
As an example of what to look for when shopping, Spirit Financial Credit Union auto refinance provides members with competitive auto loan rates, flexible terms, and the benefit of lower-cost GAP insurance coverage. Spirit Financial provides GAP coverage at a cost of $295, while the average cost at a typical dealership can be $800 to $1000. Spirit Financial also offers to beat your current auto loan rate by 1%* in addition to providing a $100* cash bonus at closing.
Crunch the numbers
Tap here to access our suite of financial calculators and use the Loan Payment Calculator to compare your current rate, payment, and term with the rate, payment, and term of the loan that you're refinancing to.
The bottom line
Shopping around to refinance your existing auto loan can have many advantages, from lowering your monthly payment to helping you realize significant savings in overall interest paid. You can also put your repayment period on the fast track and pay off your loan sooner than expected. When it comes to refinancing, if your credit history is good and you have your paperwork in order, the time from loan application to lender approval should move quickly.
* Floor rate is 4.24% APR - Annual Percentage Rate. Minimum auto loan is $5,000. Current Spirit Financial Credit Union auto loans are not eligible. All loans subject to loan to value and other qualifications for final underwriting approval. If our regular rate provides you with more savings than this offer, you will receive the lower of the two rates. Proof of your current rate (APR) is required. Auto financing up to 120% for 2014 and newer and 95% for 2013 and older vehicles and terms up to 72 months. All loans based upon credit qualifications. Not all members will be eligible. $100 cash bonus for refinancing an auto loan held at another institution & will be deposited into member’s account after loan closing.