If you bought your car on a car loan, refinancing the loan can help you save a lot of money since it can lower your payable interest or repayment term. Refinancing your car loan is not a complicated process. In fact, a number of lenders offer instant loan approval decisions. These are the steps that you’ll need to take if you want to refinance your car loan.
- Evaluate your credit score: You should first check what your credit score is. If your credit score has improved, there’s a good chance you’ll be able to get a lower interest rate if you choose to refinance. On the other hand, if your credit score has decreased, it’s best to not immediately apply for refinancing.
- Check your options: Make sure to compare the various options you have. Some refinance companies may offer better interest rates than others. Doing this check will help you refinance your car loan at the best interest rate available.
- Apply for pre-qualification: If you find a few refinance loans that appeal to you, consider applying for pre-qualification. Lenders will perform a soft inquiry to check your credit score, which won’t hurt it.
- Run the numbers through an auto loan refinance calculator: It’s also a good idea to use an online auto loan refinance calculator to know how much you will be saving by refinancing your car loan.
- Gather the documents: Next, you’ll want to gather all the required documents to get your refinancing application approved. So, make sure to gather your recent loan repayment stubs, loan contract, driver’s license, Social Security number, your car’s vehicle identification number, and proof of employment and recent pay stubs.
- Evaluate the terms of the loan: Once you get pre-qualified for a few different refinance loans, ensure that you evaluate and compare the terms of different loans and pick the best one.
- Submit the application: As the last step, you should complete your application with a lender of your choice. You’ll need to submit the application form and all the required paperwork. The lender will get back to you once they’ve decided on your loan.
Once you complete signing the papers, your lender will repay your old loan, post which you’ll begin repayments to your new lender. Typically, you can expect the whole process to be completed anywhere between a few hours to a few days.