Tips, Tricks & Trends

Now Is the Time To Refinance Your Auto Loan

When we think about refinancing, we consider personal loans, credit cards, and even mortgages, but we forget that you aren’t stuck in your auto loan either. Refinancing your auto loan can seem intimidating, and it’s not an option many people consider — but there can be a lot of benefits to refinancing your car loan. Right now is a particularly good time to refinance your auto loan because interest rates are lower than average, meaning you can get a lower interest rate on a car you’ve already financed. A lower interest rate isn’t the benefit of refinancing your auto loan.

Refinancing doesn’t have to be confusing

If you are still making payments on your car, you don’t have the title for the vehicle in your name or your possession, so the title paperwork isn’t a concern to you at this point. You can reach out to your bank or other banking institutions and ask about potential rates. Right now, prices are lower than they have been in a while, a way for the banks to compete to get more clients by offering more competitive interest rates. This might work for the banks’ benefit, but it also helps us as consumers.

A worker cleans new cars at a dealership lot
A worker cleaning cars at a dealership | ADRIAN DENNIS/AFP via Getty Images

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Before you start looking at options for refinancing, it’s essential to check out what your credit score looks like. If your credit score is higher than when you initially financed the car, then you’re in an excellent position to get a lower interest rate. The rate that a bank is offering in advertisements is typically based on having great or excellent credit ratings. While many people could be nervous about having the credit pulled repetitively to look around different institutions for financing, you can do this multiple times within a few days without hurting your credit, so you mustn’t settle for the first interest rate that you are offered.

Refinancing in times like these

Refinancing your auto loan doesn’t just mean you are getting a lower interest rate that will benefit you in the long run. It also affects our monthly budget. Most of the time, when you have the option to refinance, you can also lower your monthly payments. While certain parts of the world have begun to reopen slowly, many businesses and workplaces remain closed due to the COVID-19 outbreak, putting more and more stress on families.

Two Ford Explorer SUVs parked in a lot
Ford Explorers in a parking lot | Mario Tama/Getty Images

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If you’ve ever refinanced your mortgage, you might be thinking that the savings you could get from refinancing your auto loan isn’t worth the hassle. To the contrary, refinancing your auto loan can be a relatively painless and straightforward process. It’s significantly less involved than refinancing other investments, and it can be done in as little as a few hours depending on how much time you want to invest in researching.