Easy Ways to Refinance a Car
If you’ve been paying off your car for a while, you might be wondering if it’s time to refinance. It can be a good idea to do so if you want to lower your monthly payments or consolidate other loans—but it may not make sense if you’re not sure how much longer you’ll keep the vehicle. In this post, you’ll know how to evaluate whether refinancing makes sense for your situation.
Make at least six on-time payments
How soon can you refinance a car? To qualify for a refinance, you need to make at least six on-time payments. “Refinancing your auto loan six months into your term may be right for you if you can lock in a lower interest rate at this stage ” according to Lantern by SoFi advisors.
You’ll also need to have a good credit score. If your credit is poor and you want to lower the interest rate on your car loan, getting a new credit card and making payments consistently will help build up your score over time.
Once you’re ready to apply for refinancing, check out what kinds of interest rates are available by using an online tool like LendingTree or Bankrate. These websites compare offers from different lenders so that you can find one with the best terms for your situation.
Double check your credit
It is important to check your credit report before refinancing a car. Your credit score will help determine the interest rate that you pay, and what rates are offered to you by lenders. You can get a free copy of your credit report from each of the three major credit bureaus every 12 months at annualcreditreport.com. Checking your credit report regularly can help identify errors on your file, which may affect your score and potentially increase the cost of financing in the future.
Shop for rates with multiple lenders
When you’re shopping for a refinance, it’s important to shop around. Ask a few lenders what they can offer you on an auto loan. Get quotes from multiple lenders at once, and compare the terms of each loan—not just the interest rate.
For example: Some lenders might charge fees that others don’t charge; some might have prepayment penalties while others don’t; some may offer lower down payments while others require more cash up front. These are all factors that contribute to the total cost of your car loan—so look at everything before making any decisions!
Have a down payment for the new loan
Financing a new car with a small down payment is possible, but it’s not recommended. You’re better off saving up for at least 20% of the purchase price.
If you don’t have enough cash to make an adequate down payment on your new car, you may be able to get a personal loan or gift of cash from family members or friends. This will allow you to make a larger initial payment and will also help reduce interest costs over time.
Once you’ve made a decision, you can start the process of refinancing your car. This process will vary slightly depending on the lender with whom you choose to work, but overall it is relatively straightforward. You will need to fill out some paperwork and provide proof that you have sufficient income and assets for the loan. Your lender will also look at your credit history before approving or denying your request for refinancing—so make sure there are no errors in either score!
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