Buying a vehicle is a major purchase. It’s important to understand that after taking out your initial auto loan, there are still options available that could help you save money, such as refinancing.
What does it mean to refinance your vehicle?
When you refinance a car loan, you’re taking on a new loan to pay off the balance of your existing car loan. People do this to save money because refinancing could score you a lower interest rate and decrease your monthly payment.
What can change when you refinance?
Depending on the lender and borrower, these terms may change:
- Reduced monthly car payment
- A lower interest rate
- Longer loan term
- Shorter loan term
When is refinancing a good idea?
Refinancing depends on several individual factors. Has your financial situation improved since you initially purchased your car? For example, if you have improved your credit score by paying off credit cards, making timely payments or decreasing your debt-to-income (DTI) ratio, then you might be a good candidate for refinancing.
Is it right for you?
Refinancing your car can save you money but every individual scenario is different. If you feel like your financial conditions are right, turn to a car dealer or financial institution you can trust to learn more.