How to Refinance a Car Loan

Even if you’re not currently having trouble with your monthly payments, knowing how to refinance a car loan is important! After all, refinancing is a great way to lower your month-to-month costs, especially if you’ve previously struggled with bad credit or no credit in the past. We’ve put together a short guide on the best way to refinance an auto loan near Edgewater, so you can move forward with confidence when the time is right.

When Should I Refinance an Auto Loan?

The goal in any refinancing operation is to lower the amount of interest that you pay each month. In order to do that, you’ll need to secure a lower interest rate by closing out your old loan and starting a new plan with a bank or a dealership. Still not sure if it’s a good time to refinance your auto loan? We think it’s a good option to explore:

• If you’ve recently paid off other debts
• If you’ve raised your credit score by a significant margin
• If you’re at risk of falling behind on your monthly payments

Refinancing might not be the best route if there are fees associated with early repayment on the loan you currently possess. The same is true if you’re trying to save an older vehicle or one that’s currently worth less than you owe. It’s best to refinance an auto loan before you fall behind on monthly payments, but you may not have the best luck if you’re already struggling to meet deadlines.

How Do You Refinance a Car Loan?

So, you’ve decided that it’s the right time to set up a new financing plan. How do you refinance an auto loan, anyway? We’ll take you through the basic steps here:

• Know your financial situation. Check your credit score, and make a real monthly budget. Knowledge is power where financing is concerned, and the informed driver is more likely to be approved–especially if their credit is on the up-and-up.
• Make your applications. Make a list of potential lenders who could authorize your refinancing package, and know that Jaguar Annapolis is in your corner. Plan to make all of your auto loan applications within a 14-day window, to avoid any negative reporting on your credit report.
• Compare and evaluate your offers. Not all refinancing packages are equal. Read the fine print, check for fees, and make sure that the new loan package includes a monthly payment you can afford! Settle on the package the makes the most sense for your budget.
• Don’t forget the loan term. One common pitfall requires drivers to pay even more over the long term. If you secure a lower interest rate but need to add years to your repayment schedule, refinancing might not be the best option after all. Shorter terms generally mean higher monthly payments, but lower total costs.

Having trouble getting started? If you’re anywhere near Crofton or Upper Marlboro, visit Jaguar Annapolis and talk through your options with a representative at our financing center. 

What to Know When Refinancing Your Car

It’s important to note that refinancing an auto loan may not be a perfect solution for everyone, and depending on where you’re coming from, it may not even be an option right now! Here’s what to know when refinancing your car, so you don’t get left out in the cold:

• Fees: You will want to check your original car loan to make sure there aren’t any fees associated with paying it off early. If there are, refinancing may not be cost-effective. 
• 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. 

Learn About Your Financing Options at Jaguar Annapolis

If you’re determined to refinance your auto loan, reach out to our financing department or make your application for financing today! We can help you learn more about all of the available financing and insurance options while you’re here.