Many wonder if refinancing a car is an option with their current auto loan, and in a very high percentage of cases, the answer is yes. But why even go through the trouble? In this article, we will look briefly at reasons that someone would consider the refinance option on a current auto loan.
- Interest Rates Have Lowered. When first acquiring a car loan, you may have taken on the standard fixed interest rate. However, over time, rates can lower, leaving you feeling unhappy with your now too-high rate. Refinancing a car solves this problem because it allows you to get out of your current auto loan and into a new one at a lower rate.
- Your Credit Score Has Improved. When you first financed your vehicle, you may have had a low credit score, which resulted in a high interest rate. However, over the years, your score has improved and you want to take advantage of a better rate. Choosing to refinance can help you do this. Get a free credit report now and get approved for that lower rate.
- You Want to Get Out of a Lease. If you are currently leasing a vehicle and want to eventually own it, choosing to refinance can get you out of your current auto loan. In order to do this, you can work with a lending institution that will allow you to take out a loan for the full remaining balance. Doing this allows you to pay off the car, effectively ending your relationship with the dealer. Afterward, you will be obligated to pay back the lending company but with a lower rate.
- Your Loan is Upside-Down. If you owe more on your auto loan than the car is actually worth, it is considered upside-down. In this case, refinancing a car can get you out of this negative situation.
Now that you’ve learned that refinancing a car is possible – and how it can be beneficial – it’s time to re-evaluate your current loan to determine if now is a good time to refinance your auto loan.